Yield-Curve Inversion Hits World's Biggest Covered-Bond Market

  • Recession fears may be driving market in Denmark, Nordea says
  • Mortgage lenders are holding quarterly refinancing auctions

The old stock exchange building, left, also known as Borsbygningen, and Christiansborg Palace, right, sit on the city skyline seen from the headquarters of the Danish central bank in Copenhagen.

Photographer: Carsten Snejbjerg/Bloomberg
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For the first time since the financial crisis, yields at the very shortest end of Denmark’s $500 billion covered-bond market are higher than on longer-dated notes.

Mortgage banks holding quarterly refinancing auctions in Denmark are offering bonds with maturities of one to five years, and Nordea Bank Abp estimates that about 38 billion kroner ($5.7 billion) in bullet bonds will be refinanced. But investors are cooling to the shortest bonds, according to Lise Bergmann, chief analyst at the Danish mortgage unit of Nordea in Copenhagen.