The Pfandbrief 2011 | 2012

The Pfandbrief Market 2010/2011
Covered Refinancing Gaining in Importance
The considerable interest shown by investors in covered bonds in general and Pfandbriefe
in particular give rise to a win-win situation for refinancing banks and investors. Whereas,
for banks, the advantages of the favorably priced covered refinancing are gaining in importance
compared with senior unsecured bonds, for investors, their need for greater safety and
therefore the safety of the investment are the foremost aspects. In this context, the Pfandbrief
profits from its particularly conservative legal framework, which demands that the cover pools
must be of a consistently high quality.
New issuance of Pfandbriefe saw a positive development. Whilst in 2010, the issuance
volume of €87 billion fell just short of forecasts, the issuance volume in the first half-year of
2011 came closer to expectations at €45 billion. This is true both of Mortgage Pfandbriefe
(including Ship Pfandbriefe) and of Public Pfandbriefe.
First-time issuance 1st HY 2007 1st HY 2008 1st HY 2009 1st HY 2010 1st HY 2011**
of Pfandbriefe in billion € in billion € in billion € in billion € in billion €
22
Mortgage Pfandbriefe* 9.5 31.6 34.2 26.2 21.9
Public Pfandbriefe 58.6 52.8 31.2 23.4 23.5
Pfandbriefe total 68.1 84.4 65.4 49.6 45.4
* incl. Ship Pfandbriefe Sources: Deutsche Bundesbank, vdp
** preliminary figures
A buoyant start to 2011 was followed by a certain easing, a trend which had also been seen
in previous years. Nevertheless, the friendly sentiment on the primary market for Pfandbriefe
was sustained during the first half of 2011. Whereas mostly medium-term maturities had been
sold one year before, longer-dated maturities were again also brought to market.
Jumbo Pfandbriefe posted gross sales of just under €20 billion in the first half-year of
2011. This result is already very close to the target volume for the entire year, which was
calculated at €22 billion following the annual survey of member banks.
The volume outstanding on the Pfandbrief market slipped by €10 billion to €630 billion
in the first quarter of 2011 (-1.6%). By comparison, in the first quarter of 2010, the volume
outstanding contracted by €17 billion to €702 billion (-2.4%).
Because maturities are still in excess of new issues, total Public Pfandbriefe outstanding
fell further. Consolidation in public-sector finance continues because, amongst other things,
there is no substitute that is eligible as cover for formerly government-guaranteed loans of
the Landesbanken and savings banks. This means that the cover pools are shrinking. The
regulatory requirements currently under discussion, such as the leverage ratio, are putting
additional pressure on public-sector finance.