Cologne – LAWFUEL – European Business + Law – DLA Piper UK LLP (DLA …

Cologne – LAWFUEL – European Business + Law – DLA Piper UK LLP (DLA Piper) advised Landesbank Berlin AG (LBB) on the structuring of a structured covered bonds programme, called the Daheim Nr. 1 programme. Moody’s, the ratings agency, published its presale report on this new product today.

LBB is the first German bank to develop a programme for covered bonds not relying upon the special legislation for German covered bonds – Pfandbriefgesetz – but on general German law. The Daheim Nr. 1 covered bond programme provides bonds backed by residential mortgage pools which were originated by German savings banks. The programme therefore offers specific savings banks a new opportunity to refinance their business and/or to create further fee income.

Each series of bonds under the Daheim programme is secured by a separate pool of residential mortgage loans. The relevant savings banks provide the mortgage loans to act as security for the LBB bonds, receiving a fee in return. In case the savings bank needs refinancing, LBB will grant a refinancing loan to a savings bank which again is backed by a portfolio of mortgage loans. This refinancing loan (and indirectly also the security provided) is then used to cover the bonds issued by LBB under the Daheim Nr. 1 programme. To create sufficient insolvency remoteness of the security provided, the structure uses techniques known from securitisation transactions.

The rating agency Moody’s has assigned provisional long-term ratings of (P)Aaa to this proposed issuance of bonds. LBB intends to initially issue bonds covered with a mortgage loan portfolio originated by LBB itself to introduce the new structure to investors.

LBB was advised by Nina-Luisa Siedler (partner, Finance & Projects), Petra Tesch and Rolf Kobabe (associates, Finance & Projects) from DLA Piper’s Frankfurt office.