Bloomberg News

Deutsche Bank Notes Fall After Lender Scraps 2011 Profit Target

October 04, 2011

Oct. 4 (Bloomberg) -- Notes sold by Deutsche Bank AG less than a week ago fell after Germany’s biggest lender abandoned its 2011 profit forecast.

The bank’s floating-rate notes due 2013 fell 0.09 cents to 99.66 cents on the euro, according to Bloomberg Bond Trader prices at 2:30 p.m. in London. The 1.5 billion-euro ($2 billion) issue priced at 99.743 when it went on sale Sept. 29 and was the first public offering of unsecured bank debt in two months.

Deutsche Bank said today its 10 billion-euro pretax target for 2011 won’t be met as Europe’s sovereign debt crisis hurts revenue. European banks’ access to bond markets has been restricted amid investor concerns about the losses lenders may incur from their holdings of Greek and other indebted euro- nation debt.

“It isn’t very investor-friendly to raise cash in the bond markets and then announce a profit warning just three business days later,” said Serafi Rodriguez, a fixed-income trader at Banc Internacional d’Andorra. “If they had done it the other way around, the pricing of the deal would probably have been significantly different.”

Deutsche Bank’s note sale last week was the first public benchmark-sized senior unsecured deal from a European bank since UniCredit SpA issued floating-rate securities on July 13. ABN Amro NV in Amsterdam followed Deutsche Bank with an unsecured note offering on Sept. 30.

Credit-default swaps on the senior debt of Deutsche Bank climbed 19 basis points to 210, the highest since Sept. 23, according to CMA prices. An increase in the price of the debt- insurance contracts indicates deterioration in the perception of credit quality.

Christoph Blumenthal, a Deutsche Bank spokesman in London, declined to comment.

--With assistance from Abigail Moses in London. Editors: Andrew Reierson, Michael Shanahan

To contact the reporters on this story: Ben Martin in London at bmartin38@bloomberg.net; Esteban Duarte in Madrid at eduarterubia@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at Parmstrong10@bloomberg.net


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