Bloomberg News

NordLB Sells the First German Bonds Backed by Aircraft Loans

July 10, 2012

Norddeutsche Landesbank Girozentrale, the German state-owned bank also known as NordLB, sold what it described as the first bond backed by aircraft loans.

The 500 million euro five-year bond has a coupon of 1.625 percent. The spread was mid-swaps plus 55 basis points. Aircraft financing has proved a growth area, the bank said in a press release today.

“Covered bonds are another possibility for us to refinance,” spokeswoman Michaela Stamme said by phone. “Investors perceive the bonds as very safe.”

Asset-backed securities traditionally funnel payments from mortgages, credit cards or auto loans. Investors are increasingly looking for other kinds of debt with higher yields, such as solar bonds, as German government bond yields drop.

“The aviation sector increasingly needs financing,” said Jens Tolckmitt, chief executive officer of the association of German Pfandbriefbanken, an industry body, said in a statement. “It’s an attractive way for investors to diversify,” and legal requirements make the bonds safer, he said.

Moody’s rated the bond A2, the sixth-highest investment grade. About 95 percent of the pfandbrief bonds were sold to savings banks, insurance companies, funds and pension funds in Germany, the company said.

To contact the reporter on this story: Janhenrik Forster in Frankfurt at jforster14@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net


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