05.06.2025
AS LHV Pank issued four-year covered bonds worth 300 million euros. Covered bonds issued for the purpose of diversifying sources of financing shall be listed on the Dublin stock Exchange.
Covered bonds secured by Estonian home loans were sold to European institutional investors. 44 institutional investors participated in the offer and the offer was 2.5 times oversubscribed. 61% of subscription applications came from international asset management companies and 13% came from central banks. The remaining bonds were subscribed by international institutions and institutional investors. Geographically, 42% of investors came from Scandinavian countries and 20% came from Germany, while the remaining investors were mainly from Central and Eastern Europe, Benelux countries and elsewhere. Covered bonds were issued by a margin of 58 basis points above the mid-swap rate. In total, the interest rate on covered bonds was 2.68%. Covered bonds are expected to be listed on the Dublin stock Exchange within a week. The expected rating of covered bonds by Moody's investors Service Ltd is Aaa.
“It is a great pleasure that another issue of covered bonds has been well received by investors. This year, we have increased the volume of the LHV Pank covered bonds programme to 1.5 billion euros, allowing us to more flexibly manage redemptions of existing covered bonds and support the issuance of new home loans. The EUR 300 million issue was carried out under a programme that has also led to our past covered bond issuance. This is part of our preparation for the redemption of covered bonds issued in June 2020, due on June 9, 2025, and at the same time it creates the prerequisites for financing new home loans. Covered bonds allow LHV Pank access to stable and long-term financing that is in line with the long term of home loans and helps to diversify our funding sources. This in turn creates the opportunity to offer competitive and stable conditions to loan clients in the future,” commented Juhan Peet, Head of LHV Treasury.
“For LHV, this year it was already the second issue in international capital markets. The great interest in our offer shows the confidence of investors in LHV, the Estonian economic environment and also the home loan market here. The highest possible Aaa credit rating of covered bonds by Moody's investors Service confirms that LHV covered bonds are of very high quality and have very low credit risk. We plan to use the possibility of raising money through covered bonds in the future,” Peet added.
According to Catlin Vatsel, Head of LHV Private Financing, LHV home loans are clearly gaining momentum. “Our home loan portfolio recently exceeded 1.5 billion euros, indicating that clients trust us in financing home purchases and appreciate our flexible conditions and personal approach. This year, one in four home loans in Estonia has already been taken from LHV,” said Vatsel. “It is stable funding and high client satisfaction that provide the certainty to keep that growth ambition,” she added.
LHV Pank has been issuing home loans since 2016. The European Central Bank authorised LHV Pank to issue covered bonds in 2020 on the proposal of the Estonian Financial Supervision Authority.
Information on covered bonds is available at: https://investor.lhv.ee/pandikirjad/.
LHV Group is the largest domestic financial group and capital provider in Estonia. The LHV Group’s key subsidiaries are LHV Pank, LHV Varahaldus, LHV Kindlustus, and LHV Bank Limited. The Group employs over 1,100 people. As at the end of March, LHV’s banking services are being used by 465,000 clients, the pension funds managed by LHV have 118,000 active clients, and LHV Kindlustus is protecting a total of 174,000 clients. LHV Bank Limited, a subsidiary of the Group, holds a banking licence in the United Kingdom and provides banking services to international financial technology companies, as well as loans to small and medium-sized enterprises.
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