Wuerttembergische Hypothekenbank which from 2006 onwards will trade as Hypo Real Estate Bank International AG is for the first time issuing a "Slimbo" money market bond (Short Liquid Money market Bond).
The "WuerttHyp Slimbo No. 1" of Wuerttembergischen Hypothekenbank has an initial issue volume of 1 billion. It has a life of seven months, and the re-offer price is 1.25 bp above seven-month Euribor. This is equivalent to a yield of 2.1935 %. The smallest tradable unit is 50,000. The "WuerttHyp Slimbo 1" will be listed over-the-counter (OTC) trading on the Stuttgart stock exchange. The syndicate and market makers comprise LBBW, Citigroup, Commerzbank, Dresdner Kleinwort Wasserstein, IXIS and HVB.
This type of bond, which is new in this version, is a bearer bond with a minimum issue volume of 500 million. "Slimbos" provide the advantages of high liquidity and a short life (approx. two years). The high liquidity, which will be retained until the last day of maturity, will be guaranteed by permanent market making of the lead managers. A further attractive aspect is the spread between bid and offer price which varies between one and four Cents depending on maturity. This means that the paper is very negotiable. Bloomberg and EUREX Bonds provide an electronic trading platform for the Slimbo.
Source: Hypo Real Estate