Nord LB Offloads Loan Risk

Hannover-based bank Norddeutsche Landesbank Girozentrale is set to offload the risk of a EUR383 million portfolio of East German multi-family commercial mortgage loans to investors through a synthetic securitization sponsored by Kreditanstalt fuer Wiederaufbau, a state-owned German bank.

  • 19 May 2006
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Hannover-based bank Norddeutsche Landesbank Girozentrale is set to offload the risk of a EUR383 million portfolio of East German multi-family commercial mortgage loans to investors through a synthetic securitization sponsored by Kreditanstalt fuer Wiederaufbau, a state-owned German bank.

KfW will provide credit protection on the portfolio through a bank swap with Nord LB and will in turn hedge exposure through a senior credit-default swap and a certificate agreement with special purpose vehicle Primus MULTI HAUS 2006. KfW's counterparty could not be immediately confirmed, although Banc of America Securities in London arranged the deal.

The transaction features a synthetic excess spread of 0.25%, which on each quarterly payment date can be used to reduce any credit loses in the portfolio and protect investors. Marketing of the deal is thought to be kicking off shortly, led by BofA. Sales officials from the U.S. house and press officers at KfW and Nord LB declined comment.

Investors will be offered exposure through EUR118.5 million of rated credit-lined notes, including 28.7 million of AAA paper, which will be issued by the SPV. The deal is thought be one of the first securitizations of multi-family CMBS to hit the market this year, according to credit officials, and also one of the first German securitizations to feature an onshore SPV.

  • 19 May 2006

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