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Geschäftsbericht 2014, englisch

13management report low volume of new issues and good asset quality. However, other European covered bonds recorded even stronger narrowing of spreads, which in turn slightly reduced the refinancing advan- tage of the Pfandbrief. “Pfandbriefe and other covered bonds remained a sought-after class of investment.” Interest rates continued to steadily drift downwards as 10-year Bunds fell from 1.93 percent at the start of the year to 0.54 per- cent at the end of 2014. This development was reinforced by a weak European economy, the substantial drop in the price of crude oil and the ECB’s policies. Furthermore, numerous historic lows were recorded for yields around the world. Due to the neg- ative yields offered for financial investments in euros and Swiss francs, short-term interest rates through to the yield on 5-year Bunds turned negative. had been pegged to the euro, also declined. At the start of 2015 the Swiss National Bank (SNB) surprised the markets when it de- cided to no longer hold the Swiss franc at a fixed exchange rate with the euro. As a result the Swiss franc/euro rate surged from 1.20 to 1.01 Swiss francs. Although the DAX hit new record highs of more than 10,000 points during the course of 2014, it also experienced sharp de- clines down to 8,350 points and ended the year at about 9,800 points, or 2.7 percent higher than the closing figure posted at the end of the previous year. Stock markets outside of Europe performed better as the Dow Jones Index climbed by 7.5 percent, while the Nikkei Index rose by about 7 percent. Pfandbriefe and other covered bonds were again sought after in- vestments in 2014 as their good credit quality coupled with the regulatory advantages they offered over senior unsecured bonds, as well as the ECB’s third covered bond purchase programme, led to significantly narrowing spreads. The sharp decline in the volume of new issues in the previous year was partially corrected in 2014. More favourable issuing conditions helped increase sales of euro-denominated covered bonds by about € 17 billion to € 114 billion. Sales of all categories of Pfandbriefe in all curren- cies remained steady at € 159 billion compared to € 158 billion in 2013. The German Pfandbrief continued to benefit from the Source: Bloomberg Figures in % | yield on ten-year bunds 2014 January February March April May June July August September October November December 1.5 1.0 0.5 2.0 2.5

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