The shortest path to the European markets is through your local CSD


It’s been almost five years since companies and financial institutions were first able to issue Euro-based bonds through VP Securities. In this article, we look at three compelling reasons why the shortest route to the European markets is through VP.

Reason #1 – Significant investor reach

One of the main concerns that arises when considering using a Danish CSD to issue Euro-denominated bonds is the question of investor reach. In this regard, Danish issuers going through VP have a definite advantage. “We’ve invested in a platform, T2S, that benefits issuers,” Bjørn Crepaz, Head of Issuer Products with VP, explains. “T2S – combined with links to important investor hubs – creates a shared, coherent market infrastructure that gives Danish issuers access to a large, international investor base.”

Experience also shows that international investors are not deterred by securities issued under Danish law. “Our customers have been surprised time and time again that it’s simply not an issue for international investors. In our most recent issuance with Jyske Realkredit, they didn’t get a single question about the Danish ISIN,” says Bjørn Crepaz.

Did you know - Investor reach via T2S

There are currently 21 Central Securities Depositories (CSDs) on the T2S platform and a total of 1,490 banks, plus the 1,600 banks that have accounts at Euroclear Bank and the 1,300 banks with Clearstream Bank Luxembourg. Issuers also reach Tier 2 and 3 investors by issuing via T2S.

Reason #2 – Lower costs and faster processing

Existing VP customers benefit from true Straight-Through-Processing (STP), which provides a quicker path to market than with other banks. Danish issuers can use the same infrastructure and processes they use when issuing bonds in Danish or Swedish kroner, which also adds a degree of certainty and efficiency to the process.

Issuing Euro-denominated bonds through VP also enables issuers to work under Danish legislation. This makes the process simpler, more efficient and cost-effective. “When you have to involve external counsel and advisors specialising in, for instance, UK law, you increase issuance costs by three to five times what you would have to pay with a Danish law prospectus,” comments Bjørn Crepaz. And there is the added benefit of minimised risk, as VP settles using central bank money, as opposed to the commercial bank money used by ICSDs.

Reason #3 – A proven model

Over the past few years, companies and financial institutions have issued Euro-denominated corporate, structured and mortgage bonds through VP. The wide range of bonds and issuers testifies to the flexibility and reliability of the process. “We’ve had the large banks, such as Danske Bank, and mortgage credit institutions, like Nykredit and Jyske Realkredit, and we’ve had corporates such as DSV and Danish Ship Finance,” Bjørn Crepaz states. “These examples demonstrate that whether you raise capital via investment-grade or high-yield bonds, and whether you’re issuing in Euros or one of the Scandinavian currencies, VP can meet your issuance needs.”

Helping fund local economies

Euronext’s main goal with its CSD business is to facilitate the funding of local economies through a smooth, harmonised infrastructure. And in light of the current situation, those funding needs are considerable. “All across Europe, countries have taken measures to tackle the current Covid-19 health crisis. Most states are applying an expansive – and expensive – fiscal policy, which results in big funding needs. Corporations need new funding via bond issuances or capital increases; governments are issuing bonds; and investors, who in many countries are facing negative interest rates, are looking for opportunities to get a return on their excess capital. All these needs can be met through well-functioning capital markets, where investors meet issuers. Our role is to help facilitate this exchange of funds, by creating an efficient issuance process across currencies,” concludes Bjørn Crepaz.

Did you know?

You can use bonds issued through VP as collateral in the ECB’s two collateral programmes: the Correspondent Central Banking Model (CCBM) and the Corporate Sector Purchase Programme (CSPP).


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Bjørn Stendorph Crepaz

Head of Issuance & Issuer Services at Euronext Securities

Phone: +45 2969 2815

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Henrik Høj

Senior Relationship Manager

Phone: +45 4358 8794

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