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COBALT advised Luminor Bank on the first issue of covered bonds in the Baltic region, in the amount of EUR 500 million


On 5 March, Luminor Bank completed its inaugural issue of covered bonds and the first ever issue of covered bonds in the Baltic region, by issuing covered bonds with the aggregate nominal value of EUR 500 million. The covered bonds are to be listed on the Euronext Dublin Stock Exchange.

Investor’s appetite for the covered bonds was extremely strong and Luminor Bank received orders in excess of EUR 1.6 billion from international investors. Due to strong demand for the covered bonds and the low euro interest rates, the final yield ended up at -0.18%, which represents a record low rate paid by a Baltic non-government issuer. Moody’s has assigned a provisional (P) Aa1 rating for the covered bonds, which is currently the highest credit rating assigned in the Baltic countries.

The covered bonds were issued as part of Luminor’s Euro Mid-Term Note Programme and are covered by claims arising from mortgage loans issued by Luminor in Estonia entered into the cover pool. Luminor plans to continue issuing further tranches of covered bonds under its Euro Mid-Term Note Programme and in relation to that, supplement the cover pool with claims Latvian and Lithuanian mortgage loans.

The covered bonds were issued by Luminor on the basis of its additional license to issue cover bonds, which was issued to Luminor on 19 December 2019. Luminor was the first bank in Estonia to have been issued such license.

COBALT advised Luminor on Estonian law matters in all steps of the transaction. COBALT’s team for this project consisted of partner Marina Kotkas, senior associate Mattias Tammeaid, managing associate Monika Koolmeister and associates Sven Böttcher and Peep Vähi.

For more information, please see Luminor’s press release on the transaction here.