Issuer: Deutsche Bank
Date: July 1998
Amount: $2.4 billion
Global arranger: Deutsche
Deutsche became the first bank ever to issue a public term securitization of German corporate loans in July last year.
Over 5,000 German corporate loans were securitized and the portfolio contained the most diverse group of loans seen in any single-country collateralized loan obligation (CLO) transaction. The loans are spread throughout Germany and in industries as diversified as real estate, electrical engineering, and food and tobacco.
“It is a pristine portfolio,” says KV Prabhakar, director and head securitization trader at Deutsche. None of the corporate loans has suffered any loss and the weighted average age of the loans is 27.4 months, which provides significant payment history. The notes are divided into six classes, with credit ratings ranging from triple-A to double-B- % are rated triple-A. No single borrower represents more than 1% of the pool.
The diversification provided an opportunity to invest in a pool of mid-market German corporates, most of which have never before been publicly-rated. Both S&P and Moody’s rated each subordinated group of the portfolio based on historical loss performance, credit support, hedging arrangements, legal structure and due diligence.