LIFE FOR MANY Pfandbrief issuers is less miserable than it has
been in recent years, but it's still not much fun.
The steady credit deterioration and spread volatility that have
made Pfandbrief issuance such a trial over the past two years has
slowed down. Germany's revised mortgage bank law gives issuers new
and welcome tools, such as the ability to use derivatives in
Pfandbrief cover pools to reduce risk. And the more responsible and
transparent approach to the primary markets that most issuers have
adopted is starting to bear fruit. Several successful deals this
year seemed to offer hope to the market, as investors scrambled for
highly rated assets.
But uncertainty may reduce capital markets activities to a
minimum for the foreseeable future. More changes to the Pfandbrief
legal and regulatory framework are needed. Some issuers want to be
regular, agency-style liquidity providers. Smaller competitors are
more likely to be scaling back their regular...
