About ScandiNotes

The ScandiNotes® issues are true sale cash CDO’s (collateralized debt obligations) based on subordinated loans to Nordic regional banks and savings institutions originated by the HSH Nordbank AG, Copenhagen Branch. In 2007 ScandiNotes® was issued for the fifth consequtive year.

Aim
With the ScandiNotes® structure HSH Nordbank has established a liquid, diversified bank bond based on a transparent programme and structured in such a way that the lower tranches are tax efficient for Danish private investors.

A Common Tool
Subordinated debt is a common financing tool amongst Nordic banks as it can be included in the regulatory capital. The banks are highly motivated to participate because they receive cheaper funding than could otherwise have been achieved on a bilateral basis. At the same time the banks can access the international capital markets, which they normally would be refrained from due to lack of external ratings and size.

One to Five
The four first ScandiNotes® issues were issued by Mare Baltic, which is a Guernsey-based SPV (PCC) owned by a charitable trust. Mare Baltic has been constructed as a multi-issuer program with a protected cell company structure giving investors certainty that other bonds, issued from another cell, will not affect their investments since these are completely ring fenced from one another.

The four first issues were listed on the Copenhagen Stock Exchange.

The fifth ScandNotes® was issued by the Irish SPV Scandinotes Five p.l.c. and consequently listed on the Irish Stock Exchange.

ScandiNotes® II to V have been rated by Moody’s and received high ratings on the most senior tranches.

Danish Debt Market

  • Subordinated debt is a common financing tool amongst Danish banks as it can be included in the regulatory capital
  • Subordinated term loans are non-callable for (mostly) five years and can only be redeemed prematurely upon acceptance by the local FSA
  • Subordinated term loans are characterised by only contributing 100% to the solvency for the first five years after which the solvency effect gradually declines at 25% p.a. to 0%
  • In addition to the decreasing solvency effect, subordinated term loans are attached with a step up margin of up to 1.5% after the first five years
  • Due to these factors, Danish banks not calling their subordinated loans after five years are almost unheard of.