Pfandbrief market benefits from resilience of German sovereign

The global covered bond market has continued to expand in 2010, with a raft of deals from new jurisdictions. But the German Pfandbrief remains the benchmark product in the asset class; its position strengthened by the relative health of the sovereign.

In a year where the bloated deficits of peripheral Eurozone countries have grabbed the headlines, the more risk averse among the investment community have looked for safe options. In the sovereign bond market, German Bund yields have tightened significantly as a result of this trend; while in the private sphere, the country’s covered bond product, the Pfandbrief, has also benefited.

Domestic and international investors have seized any opportunities to pick up a little spread over Bunds by