The Pfandbrief 2011 | 2012

In changeable times, investors look for a safe haven. Also in the sovereign
debt crisis that followed the bank crisis and came to a head at the end of
the first half of 2011, Pfandbriefe have proven themselves to be reliable.
Investors stand by the product in difficult times thanks, not least, to the
high degree of transparency of the cover assets. A project which Pfandbrief
banks have embarked upon currently seeks to heighten transparency
on the secondary market.
Government Debt Crisis Depresses Sentiment on the Financial Markets,
Pfandbriefe in Demand
After the IMF and EU rescue shield had been put together and the solution to the Greek debt
crisis seemed to be within reach in the second half of 2010, the sovereign debt crisis intensified
further when Ireland, too, availed itself of the rescue shield in November 2010. In the first
half of 2011, the focus fell on additional Mediterranean states. The situation in Greece grew
even worse, finally prompting S&P to downgrade the Greek credit rating to CCC in June 2011.
The differences between the eurozone countries and the European Central Bank over how to
remedy Greece’s debt problem – notably Germany’s proposal that private creditors participate
in a restructuring of Greek debt – depressed the sentiment in the financial markets. Given
the uncertainty about how the crisis would develop, covered bonds – above all, Pfandbriefe –
increasingly attracted investors’ interest.
21
Swap spreads in comparison*
bp
300
275
250
225
200
175
150
125
100
75
50
25
0
-25
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
iBoxx senior financials iBoxx all covered bonds iBoxx German Pfandbriefe
* The comparison is distorted slightly by different durations of the indices.
Sources: Commerzbank, iBoxx