Inquired - Aareal Benchmark 2026

The 3-year Pfandbrief transaction was a thourough success for Aareal Bank. We had an order book of just under € 3 billion, and reached out to accounts, for example, in Scandinavia and Switzerland. The fact that we took advantage of an issuance window in which we were not competing with other covered bond transactions certainly also helped. All in, we were able to generate the largest order book in the history of the bank with the deal, at an attractive spread of Midswaps + 13 basis points.
The bottom line is that the transaction demonstrated that the German Pfandbrief once again is seen as a crisis-proof product and attracts strong interest from investors if the maturity, issue window and spread are chosen carefully.

The business has always been subject to cyclical fluctuations. We are currently in a market phase with very low transaction volumes because interest rates rose very quickly after the Corona pandemic. This has led to price shifts throughout the market. And as long as it is not clear until when interest rates will rise, buyers and sellers will struggle to agree on a price.

But that doesn’t necessarily mean business won’t pick up. We remain vigilant and are sticking to our conservative risk policy. This can be seen, for example, in the low average loan-to-value ratios in new business and the existing portfolio, too. The location and quality of the financed buildings remain important. But also the professionalism and financial strength of our customers to adapt real estate to the new requirements made by market participants.

100 years of Aareal Bank and over 250 years of the Pfandbrief go together very well. The Pfandbrief has always been of great importance in the history of our bank. It is virtually part of the DNA of the bank, which was launched in 1923 als Deutsche WohnstättenBank AG by the Prussian Landespfandbriefanstalt, among others. Even if Aareal bank today aims for a broader funding base than in the past, it still holds true that the Pfandbrief plays out its advantages to the fullest, especially when the going in markets get rougher. But the Pfandbrief must also continue to evolve. In any case, I hope that it will remain a competitive funding instrument for well-secured loans in the future.