The Euro medium-term note (EMTN) programme a vital part of the central government's liquidity reserve as well as if the need for bolstering the foreign exchange reserve should arise.
Euro Medium-Term Note programme
A euro medium-term note is a standardised contract in a foreign currency. The Danish notes are generally denominated in EUR and USD and have a maturity of up to five years, but there are no restrictions on currency nor maturity in place. The current issuance strategy entails maintaining the EMTN programme to ensure strong and diversified market access to foreign debt. With the EMTN programme, the central government achieves a significant diversification of its investor base in terms of geographical location as well as investor type. At the same time, it allows for quick and efficient access to issuing loans in currencies with deep capital markets.
The EMTN programme is a part of the central government’s and Danmarks Nationalbank's liquidity reserve. It is important that the central government has the opportunity to access the deep and liquid international debt markets at any given time if need be. A prerequisite for this is that the central government has a regular presence in these markets. This ensures that the investors continue to have active investment mandates for securities issued by the Danish government and that all stages of the issuance process function satisfactorily. Due to these considerations, the strategy is that, in future, the central government will make annual issuances in either euro or dollar under the EMTN programme.
Due to the relatively infrequent issuance, the EMTN programme uses syndicated bond offerings. The underwriters are chosen among Danmarks Nationalbank's primary dealers.