Interest rate adjustment – floating-rate loans

For borrowers with floating-rate loans in euro with 3-month interest rate fixing

Interest rate adjustment

Interest rate adjustment means that your loan will be refinanced using new bonds and that the loan rate will be adjusted vis-à-vis market rates.

The interest rate of your loan will be adjusted by refinancing the bonds underlying your loan through a bond auction conducted via NASDAQ OMX Copenhagen. The new bonds funding your loan will be 3-month Euribor bonds with a 5-year maturity.

Your loan will be refinanced at par (100).

Euribor3 spread

To facilitate refinancing at par, an interest rate spread will be fixed for the bonds funding a loan. The interest rate spread will be added to the 3-month Euribor reference rate and remain unchanged until the next refinancing at which point a new interest rate spread will be fixed.

The spread depends on investor demand for the relevant bonds at the time of the auction. The financial crisis has changed conditions in financial markets. As a result, interest rate and yield levels in money and bond markets are not as closely correlated as they used to be.

Refinancing expectations

Nykredit expects that, under the current market conditions, a new 3-month Euribor bond with a 5-year maturity will have a higher interest rate spread than today. As a consequence, the Euribor3 loan will become more expensive.

Once refinancing has taken place, Nykredit will forward information on the loan's new interest rate as well as the 3-month Euribor spread. Please note that the loan may be prepaid at par at the time of refinancing.


Generally, Nykredit International Lending does not recommend borrowers with Euribor3 loans secured on a property located outside Denmark to remortgage into a different loan type. The reason is that transaction costs such as land registration costs generally exceed the benefit of refinancing.