Construction conservatism | Essen Hyp: leading the way with jumbos | Eurohypo: biggest in the market
If there were anxieties about how the Pfandbrief market would perform in 2005, Deutsche Genossenschafts-Hypothekenbank helped put minds at rest in January when it opened the jumbo Pfandbrief market for the year. DG Hyp's €2 billion seven-year deal was oversubscribed by investors in the space of just over one hour and eventually priced at one basis point over mid-swaps. The bond price traded through Euribor in the secondary market. Some 54% of the bonds issued were sold outside Germany. It was lead managed by Barclays, DZ Bank, HVB, and WestLB.
"You need a bit of luck," says DG Hyp's head of treasury, Hartmut Rahner. "It's always hard to predict what the reaction will be at the beginning of the year, but we chose to issue in a very favourable environment. We were looking for €2 billion, and within three hours we had more than €4 billion on our books and we were happy with the secondary market performance. In the past, five-year or 10-year maturities were the typical benchmarks, but now seven-year is very much accepted."
Could DG Hyp go out beyond 15 years? "It has some appeal to us because we are in a long-term business on the asset side, especially in real estate, and we do classical structured deals of €100 million to €200 million there," says Rahner.