Germany

The Association of German Pfandbrief Banks (vdp) was promoting the Pfandbrief under the banner “Investment without side effects” at the Euromoney Bond Investors Congress yesterday (Wednesday), but not everyone was convinced that covered bonds themselves had avoided the hangover from the subprime crisis.

The Association of German Pfandbrief Banks (vdp) is understood to be putting its weight behind calls for the introduction of an electronic trading system with an initiative of its own, and some market-makers are said to have already indicated a willingness to go ahead with such a plan, with the pay-back that they would be set to be rewarded with the lion’s share of mandates were the move to go ahead.

With German public sector issuers returning in style this week, mortgage Pfandbrief and Scandinavian issuers are being tipped as likely successors in a market where the well stocked pipeline is as much a list of those that can’t access the market as a guide to who will be next. Indeed the problem for the primary market is that it looks like those that could issue won’t, and those that would issue can’t.

Depfa priced the largest benchmark for Deutsche Pfandbriefbank in seven years yesterday (Wednesday) afternoon, a Eu2bn deal that is also the German unit’s first benchmark since June 2005 and the largest public sector Pfandbrief issue so far this year.

Depfa Deutsche Pfandbriefbank has opened books on a five year benchmark sized Pfandbrief, with the public sector lender finding conditions more appropriate for issuance through its German arm than its Irish ACS unit.

Landesbank Baden-Württemberg has priced only the second sub-Libor deal to hit the primary market this year. The Eu1.5bn five and a half year public sector covered bond was re-offered at 1bp below mid-swaps yesterday (Wednesday) afternoon, buoyed by high redemptions of Pfandbriefe that contributed towards an order book of more than Eu5bn.

Landesbank Baden-Württemberg launched a Eu1.5bn five and a half year public sector covered bond this morning that will be priced at 1bp through mid-swaps later today – the same level at which the German bank priced a Eu2bn five year deal in late September.

Sparkasse KölnBonn priced its non-jumbo covered bond yesterday afternoon, while in the non-covered bond jumbo market Land Niedersachsen mandated a Eu1.25bn 10 year issue this morning. The jumbo covered bond market, however, remains dead.

Depfa is reacting to the volatile market conditions by reducing the minimum size for its euro benchmarks this year from Eu2bn to the usual minimum jumbo standard, typically Eu1bn. The bank is also likely to continue its focus on the private placement market for issuance in 2008.

Sparkasse KölnBonn opened books for a Eu500m three year mortgage Pfandbrief issue that features market-making at 2bp over mid-swaps this morning. A syndicate official at leads Barclays Capital, Deutsche Bank and WestLB said that the order book was developing very well.

EFG Eurobank, the third largest bank in Greece, is poised to be among the first to take advantage of the new Greek covered bonds legislation. It plans to meet its wholesale funding target of approximately Eu4bn this year through a debut covered bond alongside two ABS issues.

Landesbank Berlin’s Eu1bn three year public sector Pfandbrief issue was performing well in the aftermarket today, after having come at the tightest level of any jumbo so far this year. Meanwhile the bank was also pleased to report the success and pricing level of the first German structured covered bond.