Please activate JavaScript!
Please install Adobe Flash Player, click here for download
ePaper created 2014-04-15, 13:56:41 | version 1.30.00
Management report 15 mand due to their high spreads and yields. They turned in the best performance in this asset class as their spreads narrowed sharply during the year. The volume of maturing covered bonds, however, was greater than the amount of new issues. The vol- ume of new issues of euro-denominated covered bonds in the benchmark segment fell by about € 10 billion to € 97 billion as banks reduced the size of their balance sheets and the ECB pro- vided alternative refinancing possibilities. The German Pfandbrief continued to benefit from a low volume of new issues – caused by the withdrawal of many issuers from the sovereign financing business – and the very good quality of the underlying assets. Interest rates in the longer maturities sector moved higher in Europe. The yield on 10-year Bunds rose from 1.31 percent on December 31, 2012 to 1.93 percent at the end of 2013. This move was primarily driven by fears related to the Fed ending its pur- chases of treasuries and mortgage bonds at a faster pace, as well as an increasingly improved outlook for economic growth. stock market index (DAX), which rose by 26 percent over the course of the year. Most of the other international stock markets also posted gains. The US dollar/euro trading range remained comparatively narrow over the year. Political uncertainties in the eurozone drove the exchange rate down to 1.28 US dollar/euro at the beginning of the year. The euro was significantly buoyed by the easing of the sovereign debt crisis in the second half of the year as the ex- change rate climbed to around 1.38 US dollar/euro. The change of government in Japan in 2012 along with the Japanese cen- tral bank’s newly defined monetary policy aimed at weakening the Japanese yen was successfully carried out. The euro rose vis- a-vis the yen from 113 at the beginning of the year to 145 yen. The Swiss National Bank retained its announced policy of lim- iting the rise of the Swiss franc exchange rate to the euro and held its currency over 1.20 CHF/euro. Pfandbriefe and other covered bonds were again a sought after asset class in 2013 as their good creditworthiness and the reg- ulatory advantages they offered over senior unsecured bonds generated high demand and significantly narrowing spreads despite unchanging low interest rates. Above all others, bonds issued by countries on the periphery of Europe were in great de- Figures in % yield on ten-year bunds 2013 January February March April May June July August September October November December 1.5 1.0 2.0 2.5 Source: Bloomberg