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Financial stability and financial risks

The Minimum Coupon Rate and the 4-Per-Cent Market

Since the end of 1996 the Danish capital market has seen a number of bond issues with a coupon rate of 4 per cent. These issues were primarily a consequence of the fact that the minimum coupon rate is at a historically low level and that the yield curve has been exceptionally steep. This article describes the forces driving the 4-per-cent market and also considers the actual fixing of the minimum coupon rate and the consequences which the method used has proved to have for the capital market.