DENMARK – The Danish pensions industry has welcomed the government's intention to boost alternative financing options for small and medium-sized enterprises (SMEs) in Denmark.

Labour-market fund PensionDanmark said it looked forward to having more investment options from Danish issuers.

Per Bremer Rasmussen, managing director of industry association Forsikring & Pension (F&P), said: "The pensions sector is happy to contribute to growth in Denmark, and does so already on a big scale."

More than 60% of the shares and bonds held by pension companies in the country were invested in Denmark, he said.

"We support the ambition to push forward with corporate bonds, but the main barriers must be removed," he said.
 
A government committee on corporate bonds as a financing source for SMEs presented its report at the end of last week.

Receiving the report, the ministry for business and growth said it was important to create market-based solutions that gave companies the necessary access to financing for good projects.

Annette Vilhelmsen, minister for business and growth, said: "The government will now launch proper pre-legislative work to look at ways to follow up on the committee's recommendations."

Bremer Rasmussen said that, as investors, F&P's membership was ready to support the moves, as long as investments in corporate bonds could be simple, safe and attractive.

The decision was in the hands of politicians, he added.

In its report, the committee noted that the financial and economic crisis had made access to financing harder for many SMEs.

Danish businesses will need to diversify their borrowing across an increased number of loan types and markets in the next few years, it said.

The market for corporate bonds should therefore be built up to supplement the companies' traditional sources of financing.

Among its recommendations, it put forward the possibility of using trustees in single issues of corporate bonds, according to the Norwegian model.

In Norway, independent company Norsk Tillitsmann monitors bond issuers' obligations on behalf of bondholders.

The committee recommended the securitisation of collective bond issuance from SMEs and said the regulator should establish a larger market for corporate bonds and discuss with market participants how to ensure an efficient process for the issuance.

The ministry for business and growth should initiate talks with the pensions institutions on how they can contribute – under market conditions – to strengthening the market for corporate bonds, the committee said.

Bremer Rasmussen said the association had most faith in the securitisation model via a single capital entity.

In this way, investors would have opportunities in line with those in other countries, he said.

"F&P is looking forward to talking to the new minister about the options in this area," he said. "The art is to find out whether corporate bonds can be bolstered in a way that is also interesting for pensions institutions."

PensionDanmark described the recommendations as "reasonable".

Torben Möger Pedersen, managing director of the DKK134bn (€18bn) pension fund, said: "We ourselves have a proportion of investments in corporate bonds, and we look forward to gaining more investment opportunities from Danish issuers."

At the moment, the fund has DKK15bn invested in different types of corporate bonds and loans, including Danish corporate bonds.

If the product of the new issuers was competitive, he said he expected a larger proportion of the company's corporate bonds to be invested in bonds issued by Danish companies in future.

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