NordLB to return to Pfandbrief market to boost coffers

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Norddeutsche Landesbank's (NordLB) is looking to increase its funding through a repeat aviation Pfandbrief, or covered bond programme, in the second half of this year.

Harald Brauns, NordLB's head of aviation finance, indicates the bank is eyeing another aviation Pfandbrief "in the third or fourth quarter."

The second Pfandbrief would likely have a "longer tenor" and possibly be issued in US dollars "if the market is right", he says.

The bank wanted to issue the transaction at the end of 2012 or the beginning of this year, but due to unstable market conditions, delayed the financing.

Again, proceeds from the Pfandbrief would be redeployed in the bank's €8 billion ($10.6 billion) aircraft portfolio.

NordLB sold its first €500 million aviation Pfandbrief at a coupon of 1.625% in July 2012.

In a statement the bank indicates the final book on its first aircraft Pfandbrief reached "more than two times [the] size of targeted benchmark volume" allowing the financier to reduce spread talk to 55 basis points over mid-swap.

The spread target initially on the five-year Pfandbrief was at 60 basis points, says NordLB.

The final order book of the Pfandbrief recorded "more than 60 accounts" with individual orders up to 100 million euros.

In line with the bank's expectations, 95% of the volume was sold to insurance companies, savings banks, asset managers, funds and pension funds in Germany, says NordLB.

The aviation Pfandbrief was rated "A2" by Moody's.