Pfandbriefe offer investors an attractive yield pick-up over government bonds. The German Pfandbrief is a fixed-rate paper which, like government bonds, stands for first-rate credit quality. The high quality of Pfandbriefe is reflected in the, for the most part, Triple A credits they are awarded. In some cases, Pfandbriefe even pay a pickup over bonds of smaller European states, although these are rated lower than Pfandbriefe. What is more, particularly in the Jumbo segment Pfandbriefe offer the liquidity that international institutional investors especially appreciate in individual issues.

Development of spreads

The Pfandbrief spread versus the Bund fluctuates over time. During the course of 1999, for example, the spread in the 10-year category was between 30 and 50 basis points. In the year 2000 it grew to a high of almost 70 basis points. Since then, the interest markup has narrowed again to a corridor of between 30 and 40 basis points.