Jumbo Pfandbrief market

In addition, all Jumbo Pfandbriefe with a volume outstanding of 1.25 billion or greater and with a residual life of more than two years are greatly assisted by the market making pledge, given by 17 institutions, to provide a repo market in these issues. 

The Pfandbrief market is comprised of several types of issues in addition to the aforementioned traditional and Jumbo Pfandbriefe, there are Global issues and a variety of Structured issues and the latest enhancements to the product range by the way of Medium-Term Note (MTN) and Commercial Paper (CP) programs. 

As previously discussed, the major difference between traditional and Jumbo Pfandbriefe is the issue volume. Further distinctions are also evident in the issuing procedures of the two. Traditional Pfandbriefe are brought to the market in Tap form and individual series feature within one... 

By definition, Jumbo Pfandbriefe are always plain vanilla structures Jumbos are fixed-interest bullet bonds, the coupon on which is payable annually in arrears. The calculation of interest accrued is done uniformly using the actual/actual method in line with international practice. While this standardisation helps to enhance the transparency of the market, it inhibits the ability for these issues to be targets to an investor s specific needs and this is where the structured issues come into their own. 

As at the start of 2003, no moves have be made to reinstate the Jumbo contract and presently the only way to effectively hedge ones exposure to the Pfandbrief market is via the swaps market, although many still favour the peripheral government bond route, particularly for trades conducted on a short-term horizon. 

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