A fistful of dollars
Since March three borrowers have issued Pfandbriefe in currencies other than Deutschmarks and in June another became the first to issue a fully registered global Pfandbrief - the previous four so-called globals had all been issued a rule 144A exemption.
These issues represent the next step in the process of internationalizing a market which until two years ago was almost exclusively domestic. The traditional Pfandbriefe were illiquid instruments, usually between Dm50 million ($27 million) and Dm200 million, and sold as quasi-private placements to buy-and-hold investors. They rarely achieved more than 10% to 15% involvement from foreign investors.
Although Pfandbriefe are the second largest bond market in Europe, there were fears that a purely domestically oriented product would lose out in a single-currency Europe. So in mid-1995 the jumbo sector was introduced, offering large issues of at least Dm1 billion through a syndicate of three official market-makers or...
