Eurohypo places EUR 1.5b 10-year mortgage Pfandbrief

Eurohypo, a subsidiary of Commerzbank, has issued its third jumbo Pfandbrief this year.

Within just a few hours on 25 June, the bank - Europe's largest Pfandbrief issuer and the leader in the German jumbo Pfandbrief market - placed a 10-year jumbo mortgage Pfandbrief with a benchmark volume of EUR 1.5 bn for the second time since the start of the financial market crisis.

This brings the total volume of jumbo Pfandbriefe placed by Eurohypo on the capital market in 2009 to over EUR 4.5 bn. There was a great deal of interest in the new Eurohypo Pfandbrief, with the order book totalling EUR 2.4 bn. Commerzbank was the lead manager for the transaction and Deutsche Bank, DZ Bank, BNP and Barclays were also in the consortium.


With this issue, Eurohypo was able to successfully take advantage of the current market situation. As with the previous issues in March and May of this year, the order book was of high quality. All three rating agencies (Moody’s, Standard & Poor’s, Fitch) awarded the Eurohypo jumbo their highest rating (Aaa, AAA, AAA). The Pfandbrief, issued in euro, has a maturity of ten years.


The issue's spread was in line with the market at 70 basis points above the swap average. This makes Eurohypo one of the first banks to price 5 basis points below its secondary market curve. Not only is this feat a further indication that the markets are gradually relaxing, it is also proof of the Commerzbank Group’s standing in the capital market. Demand for the Eurohypo security came mainly from banks, funds and central banks. With a share of 72%, German investors formed the backbone of this issue. The mortgage jumbo was also in demand from investors in France, the UK, Scandinavia, the Benelux countries, Austria and Switzerland.


'We have once again met with a great deal of interest from investors,' said Ralf Woitschig, a member of Eurohypo's Board of Managing Directors responsible for Public Finance/Treasury. 'Conditions are attractive and this issue has brought us another giant step closer to a normalisation of the markets. We continue to rely on the Pfandbrief as our most important refinancing instrument. The success of our new issue represents a vote of confidence by the market for Eurohypo, but it also offers proof that confidence in the German Pfandbrief has returned.'