Pfandbrief

From: http://en.wikipedia.org

The Pfandbrief, a mostly triple-A rated German bank debenture, has become the blueprint of many covered bond models in Europe and beyond.

The Pfandbrief is collateralized by long-term assets such as property mortgages or public sector loans as stipulated in the Pfandbrief Act. Total volume outstanding in Pfandbriefe (the plural of Pfandbrief is Pfandbriefe in German) was EUR 889 billion in 2007. Pfandbrief bonds make up the third largest segment of the German bond market after public sectorbonds and unsecured bank debt.

Jumbo Pfandbrief

The Jumbo Pfandbrief, first brought to market in 1995, arose from a need to attract international investors to a market that had been largely of domestic interest. Instead of individual banks placing large-volume issues, the Jumbo Pfandbrief allows an issuing syndicate with the goal of marketing Jumbo Pfandbrief issues and of subsequently ensuring market making. A Jumbo Pfandbrief must have a minimum issuance volume of EUR 1 billion. The average issue size of a Jumbo Pfandbrief is about EUR 1.5 billion. A minimum of five market makers is required. Jumbo Pfandbriefe must be listed on the German stock exchange. [5] Total Jumbo covered bonds first-time sales amounted to EUR 161.3 billion in 2007. In 2007, the four biggest jumbo covered bond-issuing countries were France (24.7%), Spain (22.3%), Germany (20%), and the UK (10.7%).

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From: DR. LOUIS HAGEN | "The Pfandbrief 2008|2009 – Facts and Figures about Europe’s Covered Bond Benchmark", published by Association of German Pandbrief Banks, 13th edition, Berlin 2008

Pfandbrief are covered, interest-bearing bonds. They are issued by credit institutions with a license to engage in Pfandbrief business (Pfandbrief banks) and placed on the capital market. These credit institutions use them to fund certain loans that are secured by real estate liens, ship mortgages or claims against public-sector bodies. Depending on the type of collateralization, these bonds are referred to as Mortgage Pfandbriefe, Ship Pfandbriefe or Public Pfandbriefe. Most Pfandbriefe are issued in the form of bearer bonds, registered bonds also play an important role.

Links

Association of Germain Pfandbrief Banks: www.pfandbrief.org