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Greater transparency for Jumbo Pfandbriefe

·   vdvdp publishes average spreads every trading day as from today
General Manager Jens Tolckmitt: one-stop market overview

The Association of German Pfandbrief Banks (vdp) has agreed with major banks actively engaged in Pfandbrief trading on measures to improve transparency in the secondary market for Jumbo Pfandbriefe. As from today, the vdp will be publishing spread data on all German Jumbo Pfandbriefe with a residual maturity of more than two years on its website www.pfandbrief.org.

The average spreads of Jumbo Pfandbriefe versus six-month Euribor, which is to say the yield spread of each Jumbo Pfandbrief versus this benchmark, are to be published. Every trading day, the indicative spreads will be reported by currently 15 banks which number among the biggest Pfandbrief syndicate banks in the market. A statistical procedure and a Quality Assurance Committee will ensure that the average spreads published reflect market conditions.

“We offer investors and other interested parties, free of charge, a one-stop market overview. Indicative average spreads of Jumbo Pfandbriefe have never before been presented so clearly,” said Jens Tolckmitt, General Manager of the vdp, in Berlin. The Jumbo Pfandbrief market is the oldest segment of the Jumbo covered bond market, and one of the largest. Tolckmitt pointed out that German Pfandbriefe already lead the way in terms of the transparency of the cover pools. “With this platform, we are setting a further milestone in matters of transparency,” Tolckmitt said, and explained that the vdp is thus accommodating a wish for greater price transparency that smaller institutional investors in particular have often expressed.

The data will be laid out in tabular and chart form, and are to be updated from 18.15 CET onwards every trading day. Users will be able to have the data in the table displayed by different categories as well as to download the table as an Excel file. A graphic presentation (point cloud) allows investors to quickly access important details on each Jumbo Pfandbrief and compare issues of individual issuers.

Coinciding with the launch of this new service, an amendment of the Minimum Standards for Jumbo Pfandbriefe enters into force. Investors can continue to rely on receiving bid and ask prices for Jumbo Pfandbriefe from the syndicate banks. The abolishment of the rigid bid-ask spreads is compensated by the market transparency that has now been created. In addition, the new Minimum Standards now stipulate that Jumbo Pfandbrief status can also be achieved by topping up smaller issues until they reach the required minimum volume of €1 billion – provided all the other specifications for Jumbo Pfandbriefe are met. The other main features of a Jumbo Pfandbrief (five syndicate banks, listed, fixed-coupon, euro-denominated, bullet-repayment Pfandbriefe) remain unchanged. The wording of the amended Minimum Standards is also available on the Association’s website.

 Additional information:

 The Pfandbrief is one of the oldest bond types worldwide. The highly liquid Jumbo Pfandbriefe must have a minimum volume of €1 billion. Today, many products around the globe are modeled on the German Pfandbrief following its success on the international capital markets. Pfandbriefe and Pfandbrief-similar instruments are collectively referred to as “Covered Bonds”. Especially institutional investors hold the Pfandbrief in high regard for its statutory protective provisions, its transparency and its liquidity.

 

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Dr. Helga Bender
Head of the Communication, HR & Finance
Phone +49 30 20915-330
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Yvonne Sternkopf
Manager  
Phone +49 30 20915-380
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Christian Walburg
Manager Investor Relations 
Phone +49 30 20915-340
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