Enquired - Commerzbank 1bn EUR Mortgage Pfandbrief
Christian Walburg
Association of German Pfandbrief Banks
The 10-year Mortgage Pfandbrief deal was CoBa's third jumbo since the beginning of the year. What’s currently driving Commerzbank funding?
Franz-Josef Kaufmann
Commerzbank AG
We’ve planned a total funding volume of around 10 billion euros for 2024. As in the previous year, around half of this is earmarked for refinancing through Pfandbriefe. We’re constantly monitoring the market and trying to take advantage of good market opportunities by issuing in the windows available to us.
After the market uptake for covered bonds stalled in the second half of last year, we’re seeing very robust demand in the first few months of this year, including for longer maturities. We’ve taken advantage of this constructive market environment for our first 10-year issue since summer last year.
Our cover pool comprises long-term residential mortgage loans. Therefore a 10-year term fits very well into the asset and liability profile of the cover pool.
Christian Walburg
Association of German Pfandbrief Banks
The bond was 2.2 times oversubscribed, what’s driving demand?
Franz-Josef Kaufmann
Commerzbank AG
We’re seeing broad demand, which increasingly includes foreign investors as well as domestic investors. Around 40% of the 10-year Pfandbriefe were placed outside Germany, in January it was more than 60% for our 3- and 7-year dual tranche offering.
We were able to allocate the Pfandbriefe to 95 individual buyers, which is a very respectable number for a Pfandbrief transaction. Around 75% of the Pfandbriefe were allocated to asset managers and bank treasuries. The fact that the absence of demand from the Euro system has been more than compensated for is a very strong sign.
Pfandbriefe have now reached a spread level that is of interest to a wider range of asset managers. We have regular discussions with investors who are looking at the Pfandbrief concept for the first time and are showing interest. We are of course pleased about this.
Christian Walburg
Association of German Pfandbrief Banks
Commerzbank Mortgage Pfandbrief pool comes with a fairly high over-collateralisation of 40% at the end of last year, what’s behind this?
Franz-Josef Kaufmann
Commerzbank AG
Since the introduction of the Pfandbrief at Commerzbank in 2013, we’ve efficiently set up the processes for registration of real estate financings in the cover pool. As a result, the requirements of the Pfandbrief Act and the Mortgage Lending Value Regulation are already accounted for when a transaction is initiated. As a result, the cover pool is being continuously filled and has now reached a total loan volume of over 40 billion euros.
We issue Pfandbriefe primarily for the general refinancing of the Bank. That is our clear focus. To date, we have just about over 30 billion euros worth of Mortgage Pfandbriefe outstanding.