Germany

A Eu9.2bn book for Deutsche Postbank’s Eu1bn five year public sector Pfandbrief debut on Friday left market participants questioning the healthiness of such a high level of oversubscription.

Deutsche Postbank is this (Friday) morning understood to have built a book for its debut jumbo public sector Pfandbrief that is believed to be by far the largest for a covered bond in more than a year and one of the biggest ever.

Deutsche Postbank is planning a debut public sector covered bond transaction, expected next week, that will be half-backed by mortgages guaranteed by KfW, an arrangement that promises to extend the amount of collateral that can be viably used as cover for German Pfandbriefe. Meanwhile, Deutsche Kreditbank’s mortgage covered bond programme has been rated by Moody’s.

Moody’s yesterday (Monday) said that the risk that covered bondholders in Austria and Germany could be deprived of their priority right over any assets located outside the European Economic Area needs to be addressed by issuers.

Eurohypo yesterday (Thursday) issued the first 10 year jumbo Pfandbrief this year, a Eu1.5bn mortgage-backed deal that was priced at 70bp over mid-swaps. The level is “extremely tight”, the issuer told The Cover.

Eurohypo will today (Thursday) price a 10 year mortgage-backed Pfandbrief 10bp tighter than a seven year deal that it sold just five weeks ago.

Moody’s yesterday (Tuesday) put Landesbank Baden-Württemberg’s Aa1 senior debt rating on review for possible downgrade.

Westdeutsche Immobilienbank yesterday (Tuesday) priced a Eu500m three and a half year mortgage Pfandbrief, spurring the primary market back into action after more than a week devoid of new issues. The issuer told The Cover that he is glad that he held firm when considering a new issue earlier this year.

Westdeutsche Immobilienbank today (Tuesday) broke the lull in primary market activity by launching a Eu500m Pfandbrief after more than a week without new jumbo supply.

Four new members were appointed to the Association of German Pfandbrief Banks’ board at the association’s member meeting in Berlin on Friday, and Jens Tolckmitt took over the position of general manager.

Moody's and SEB AG are in discussions about the latter’s proposals to enhance its covered bond programmes to avert a downgrade, the rating agency said yesterday (Monday).

Government guaranteed issuance, illiquidity, and potential downgrades – in spite of these challenges, the Pfandbrief market has proven resilient in 2009. In this roundtable, produced in co-operation with the Association of German Pfandbrief Banks, leading market participants tackle these issues and discuss the impact of the European Central Bank’s Eu60bn purchase programme and the amendment to the Pfandbrief Act.