SEK has received permission to effect the call of Tier 2 capital
On 14 November, 2013, SEK issued the following Tier 2 instrument: ”USD 250,000,000 Fixed Rate Resettable Dated Subordinated Instruments due 14 November 2023” (below ”EMTN 5487”).
The terms and conditions entitles SEK, as issuer, to call EMTN 5487 on 14 November 2018 (such issuer’s call being market standard for these kind of instruments). By the relevant regulation follows that an issuer shall require the prior permission of the competent authority to effect the call of a Tier 2 instrument. A couple of weeks ago, SEK required such prior permission from its competent authority (Finansinspektionen).
SEK has now received the above mentioned permission from Finansinspektionen. In the autumn of 2018, the board of directors of SEK will decide as to whether SEK in fact will exercise its right to effect a call of EMTN 5487. In accordance with how the relevant regulation is set out, the permission from Finansinspektionen implies that the level of own funds already at this point of time shall be reduced with the equivalent of USD 250,000,000. Based upon the level of own funds, by the close of Q1 2018, the outcome will be that the total capital ratio is reduced with 2.4 percentages. Following the reduction of own funds, SEK is still well-capitalized, with a total capital ratio that exceeds Finansinspektionen’s requirement with 3.7 percentages, and SEK’s amount of own funds consists solely of Common Equity Tier 1 capital.
In the case the board of directors of SEK decides not to effect a call of EMTN 5487, the capital will be reinstated to own funds.