Headline: Pfandbrief issuers’ business overhaul Source: Euromoney Date: April 2001 Author: Anja Helk The German Pfandbrief market, in particular the jumbo sector, has grown dramatically in recent years and assumed a larger and larger slice of European bond fund managers’ portfolios. But now many of the leading issuers face significant challenges in the underlying lending businesses that generate Pfandbrief collateral. The German mortgage banks are seeking non-traditional business opportunities, as well as starting to sort out their underperforming mortgage lending businesses. Volumes are likely to shrink.
New loans to the public sector declined by 24% in 2000, reflecting low demand as a result of shrinking state budget deficits, as well as borrowers’ aspirations to go straight to the capital markets to raise funds. Even worse, a flattening yield curve has shattered the excellent earnings that were easily made by mismatching collateral assets and Pfandbrief liabilities before interest rates started to rise in 1999. |