Deutsche Pfandbriefbank mulls EUR 1b Jumbo issue

Deutsche Pfandbriefbank, the core bank of Germany's HRE Group, takes to the road on Monday to drum up support for its first Jumbo Pfandbrief issue this year, a spokesman for the lender told PropertyEU.

The Jumbo Pfandbrief - which, as the name suggests, would be at least EUR 1 bn - is expected to take place in the second half of September. This would be the second Jumbo Pfandbrief placement in almost as many weeks: last week, Eurohypo, a subsidiary of Commerzbank, issued its third Jumbo Pfandbrief this year, placing a two-year Jumbo mortgage Pfandbrief with a benchmark volume of EUR 1 bn within a few hours. It was oversubscribed by around 20%, Eurohypo said. All three rating agencies - Moody's, Standard & Poor's and Fitch - awarded it their highest ratings (Aaa, AAA, AAA). The Pfandbrief has a maturity date of 1 October 2013 and an interest warrant of 1.875%.

Deutsche Pfandbriefbank, along with Eurohypo, is one of the biggest issuers of Pfandbriefe, or covered bonds in Germany. Last year, Deutsche Pfandbriefbank issued EUR 4.6 bn in new long-term funding, including private placements, unsecured funding and public sector Pfandbriefe. In total, around EUR 87 bn in public and mortgage Pfandbriefe were issued in Germany last year, according to the Association of German Pfandbrief Banks (VDP). This year, the VDP predicts that around EUR 90 bn of Pfandbriefe will be issued.

And with the EUR 2 trn in commercial real estate debt across Europe, of which around EUR 500 bn needs to be refinanced over the next two-to-three years, other Jumbo Pfandbrief issuances can only be around the corner. Around 70% of debt is bank debt, 20% is covered bonds and around 10% takes the form of CMBS, according to analysts.