Covered bond
A mortgage under German law is an issued a Pfandbrief bank loan.
Additional cover pool
The Pfandbrief is characterized by the fact that the investor is also a so-called cover made available in addition to the creditworthiness of the issuing bank in the event of insolvency of the bank. The final insolvency of a Pfandbrief Bank was in 1901.
The cover pool is
- In mortgage bonds from loans receivable that are secured by liens on real estate,
- Of Public Pfandbriefe (former name: municipal bonds ) from claims against the public sector,
- At Ship Pfandbriefe from loan receivables that are secured by ship mortgages in the register of ships, and
- In aircraft mortgage bonds from loans receivable that are secured by mortgages on aircraft in a public register. The legal basis for Aircraft Pfandbriefe was not created until the Pfandbrief Act Amendment of 2009.
History
Pfandbriefe in Germany originated in 1769 in a " cabinet - Ordre " Frederick the Great. You were first securities issued by so-called landscapes - were issued for the purpose of obtaining more favorable basic agricultural credit - these were public forced associations of aristocratic landowners had a particular region. The bondholders served as the safety of certain property, also stuck a subsidiary of the countryside. Middle of the 19th century were the first mortgage lenders the right to refinance mortgage loans secured by mortgage bonds. With the Mortgage Bank Act, which together with the Civil Code ( BGB ) came into force on 1 January 1900, then that is applicable to the entire realm legal basis for the issuance of Pfandbriefe was created. In 1927, this example was followed by the Law on mortgage bonds and bonds of public financial institutions ( ÖPG ) and in 1933 the Act on Ship Pfandbrief banks.
As a result of the abolition of state guarantees for public- sector banks, it came to unify the legal bases under the force since 19 July 2005 Pfandbrief Act.
Legal basis
Uniform legal basis since the 19th July 2005, the German Pfandbrief Act ( Pfandbrief ). It allows all credit institutions which apply for and obtain the required permit for the Federal Financial Supervisory Authority ( BaFin) to use covered bonds as a funding agent.
Security
The security (also called credit rating) of a mortgage, ship or aircraft Pfandbrief is based on several pillars:
The credit quality of public Pfandbriefe is based on the creditworthiness of the public sector at home and abroad, § 20 Pfandbrief Act. All mortgage bonds are absolutely safe, lombard capable and eligible for cover funds.
Mortgage bonds usually offer a slightly higher return than government bonds, but are in regard to the creditworthiness of the emissions to be regarded as similar.
Jumbo Pfandbrief
A equipped with special features Pfandbrief is existing since May 1995 Jumbo Pfandbrief. Jumbos have a minimum issue size of more than one billion euros and a mandatory market making. From a bond market-making is called when at least three banks have against the issuer obliged with fixed bid-ask spreads during fixed trading hours to quote two-way prices to other market participants. At Jumbo Pfandbriefe at least five banks commit to take over the market-making. Therefore, these bonds are highly liquid and are obtained with the commercial market-oriented courses.
Association of German Pfandbrief Banks
37 German Pfandbrief banks have joined together in the Association of German Pfandbrief Banks (vdp ).
Covered Bonds
Pfandbriefe constitute the largest segment of the class of securities referred to covered bonds. The Pfandbrief stands out from other covered bonds mainly because from that its foundations by law (not merely contractual) are controlled such that the Pfandbrief Business of the Pfandbrief banks of a particular subject to supervision and that the law or legislature and the valuation of the property, ships and aircraft, which serve as collateral for the loan laid out, has precisely controlled.
A number of market participants in the European covered bond market have joined forces in the European Covered Bond Council.