Aareal Bank to launch its first Jumbo Pfandbrief at the end of January (DE)

Aareal Bank has announced that it will issue its first Jumbo Pfandbrief mortgage bond at the end of January. The €1 billion benchmark maturity of 5 years – which has already been rated AAA by Fitch Ratings – will be brought to the market by joint lead managers Barclays Capital, Deutsche Bank, and Dresdner Kleinwort Wasserstein. "The excellent rating confirms the high quality of international assets in our cover assets pool", said Christof Schörnig, member of Aareal Bank's Management Board and responsible for the bank's Treasury and refinancing activities.

The cover assets pool consists exclusively of first-ranked mortgages, and is broadly diversified – both by property type and region. At present, the pool contains loans on properties in 14 countries, including the US and Canada, of which 66% are outside Germany. Schörnig explained that "the bank's debut as a Jumbo Pfandbrief issuer will help to further broaden its presence on the capital markets", pointing out that "Aareal Bank seeks to leverage Jumbo Pfandbriefe, as a well-established international capital market segment, to expand its placement power beyond Germany".

He added that broadening the international diversification of the bank's liabilities – in line with the structure of its lending business – will "strengthen Aareal Bank's capital market presence by expanding its investor base, whilst reinforcing the bank's image as a reliable, fair and competent issuer".

In the fiscal year 2005 the new business volume has been distinctly increased compared to the last year . According to preliminary figures the forecasts have been fully met. "With a total commitment volume of approx. €7 billion we have achieved a remarkable result for the past fiscal year with a growth of approx. 25 % in comparison to the previous year," announced Schörnig.

The Jumbo Pfandbrief will be issued by Aareal Hyp AG, Aareal Bank's wholly-owned mortgage bank subsidiary. The bank plans to integrate Aareal Hyp into its operations during the first quarter of 2006, and to merge the unit with its parent within the framework of the new German Pfandbrief Act (Pfandbriefgesetz). Aareal Bank envisages regular Jumbo Pfandbrief issuance in the future, with up to two issues per year. "We will raise the share of covered bond issuance in the funding mix for our property lending business, from currently around 10% to a level between 40 and 60% in the medium term, thus reducing our funding costs by approx. €5 million p.a.", said Schörnig.

The Jumbo Pfandbrief issue is currently being presented to investors by a team of Aareal Bank's experts, via a series of roadshows held in ten European countries. Schörnig went on to say that "with rising capital market yields and the traditionally strong demand at the beginning of each year, the timing of the bank's debut as a Jumbo issuer is excellent.

Source: Aareal Bank

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