Annual Report 2010 - Muenchener Hypothekenbank eG

puBlic-sector anD Bank lenDinG, anD municipal loans uncertainty in the market regarding the creditworthiness of sovereign states resulted in highly volatile credit spreads. We therefore acted with corresponding caution in this business area. We made new loans in line with our conservative risk poli- cies, with the objective of keeping the volume of outstanding loans to public-sector borrowers and banks stable within the cover pool. This was because many of the existing claims and securities matured and were repaid in the first half of 2010, in particular. our excellent refinancing conditions allowed us to conclude transactions with very creditworthy parties at favour- able margins. Total volume of new loans made to the public sector and banks, as well as our municipal lending, amounted to about € 1.9 billion compared to the same year-ago figure of € 0.9 billion. refinancinG While the first half of 2010 was generally influenced by the favourable effects of the ECB’s purchasing programme for covered bonds, we were still able to tap the capital markets for refinancing purposes at favourable conditions after the pro- gramme ended. This also meant that we did not need to take advantage of the ECB refinancing options in 2010. our two Jumbo Pfandbrief issue were greeted with intense interest by the capital markets allowing us to refinance at very attractive conditions. in June we issued a 5-year Jumbo Mort- gage Pfandbrief with a volume of € 1.25 billion. The order book was closed after just two-and-a-half hours with a volume of € 1.7 billion. Regional distribution was also very broad, with more than 100 orders from 16 countries. in the second half of 2010 this Jumbo was successfully increased to € 1.5 billion. in September we issued a 3-year Jumbo Public Pfandbrief. A volume of € 1 billion was reached after only a few minutes. Shortly thereafter, the books were closed after the issue was oversubscribed by 2.2 times. With more than 100 orders from 14 countries, including many Asian investors, regional distri- bution was also widely varied for this issue. on January 3, 2011, we issued a 5-year Jumbo Mortgage Pfand- brief. it was the first benchmark issue of the year for the cov- ered bond markets. in a market environment that was still rel- atively calm due to the start of the new year, investor demand was nonetheless very high. The issue volume of € 1 billion was reached after the first hour. The order book was closed shortly thereafter with a volume of € 1.25 billion. Almost 100 orders were received from 13 countries. With a spread of 10 basis points over the mid-swap curve, we were once again able to refinance with advantageous conditions. Many other issuers followed with covered bonds and other bond placements, resulting in a record level of new bonds in the first days and weeks of 2011. Making the first move in this environ- ment turned out to be the right thing to do, since the high issuance volume led to widening spreads. decisive factors for the good sales of our Pfandbriefe are our good network of contacts in the capital market, the ongoing care we place in our relationships with our investors, and our company’s good reputation as a member of the volksbanken Raiffeisenbanken Cooperative financial Network. As a result, Münchener hypothekenbank has built a strong reputation, and it enjoys the trust of many investors as a valued partner in the capital market. The Cooperative financial Network was also an important refinancing partner for Münchener hypothekenbank in 2010. during the year under review, we sold a total of € 8.3 billion in refinancing securities. of this amount, Mortgage Pfandbriefe “the Jumbo pfandbriefe issued by münchenerhyp’s in 2010 attracted a great deal of attention in the capital markets and encountered high demand.”