Berlin Hyp AG
Berlin Hyp
Berlin Hyp
German real estate lender Berlin Hyp has raised €300m with the issue of the first syndicated senior preferred bond by a German bank. The order books were handled by Commerzbank, DZ Bank, and LBBW.
According to the institution, despite its very tight spread the Aa2 and A+ (Moody’s, Fitch) rated debut transaction with a five-year maturity encountered good demand, with 42 different investors participating. Banks took approximately 85% of the deal.
'We are the first German bank to issue a syndicated senior preferred bond and at the same time achieved an excellent spread level. We owe a debt of gratitude to our investors who made this debut a big success,' said Gero Bergmann, member of the board of managing directors at Berlin Hyp.
Berlin Hyp took pioneering steps in 2015 with the first green Pfandbrief and again in 2016 when it became the first issuer of a covered bond with a negative yield.
Changes to the insolvency regime for German bank liabilities which came into effect on 21 July have enabled German financial institutions to issue non-covered, non-subordinated debentures either as senior non-preferred or as senior preferred types for the first time. Berlin Hyp was joined by Commerzbank which also issued a senior preferred loan at the same time, with Deutsche Bank scheduled to also issue a senior preferred loan shortly.
Senior preferred notes, which are practically immune to making losses, overcome a traditional handicap for German banks in which the financial authorities have converted traditional non-subordinated bonds into riskier non-preferred securities, and add a further variant to bank bonds traded on the European primary markets since the imposition of stiffer standards globally. Financing with senior preferred bonds is cheaper than through non-preferred, and according to NordLB, are likely to make up the bulk of the €5.4bn in bonds that German banks are expected to issue before the end of the year.
Berlin Hyp posted profits for the full year 2017 up 40% to €62.2m, despite posting €80m into a specially set-up fund for general bank risks. Although CEO Sascha Klaus had dampened expectations back in March for new business this year, he said at the recent presentation of the half-year figures that this year might yet surpass last year, with a big rise in lending to developers and in common lending with the Sparkassen. Still, he said, “Quality is more important than quantity. If the markets get very aggressive, then we will trim our lending accordingly.”
