• MÜNCHENERHYP 2017
    • Letter from the Board of Management
    • Report of the Supervisory Board
    • Results at a Glance
    • The Members of the Delegates Meeting
    • Executive Management and Bodies
  • MANAGEMENT REPORT
    • ECONOMIC REPORT
      • Overall Economic Conditions
        • Economic Development
        • Financial Markets
        • Property and Property Financing Markets
      • Business Development
        • New Mortgage Business
        • Capital Markets Business
        • Refinancing
      • Asset, Financial and Earnings Situation
        • Balance Sheet Structure
        • Development of Earnings
      • Rating, Sustainability and Regulatory Conditions
        • Rating
        • Sustainability
        • Regulatory Conditions
      • Main Office, Bodies, Committees and Personnel
        • Main office
        • Bodies and Committees
        • Employees
        • Corporate Governance Statement Pursuant to Art. 289f German Commercial Code
    • RISK, OUTLOOK AND OPPORTUNITIES REPORT
      • Risk Report
        • Introduction
        • Counterparty Risk
        • Market Price Risks
        • Liquidity Risks
        • Investment Risk
        • Operational Risks
        • Ability to Bear Risks
        • Use of Finance Instruments for Hedging Purposes
        • Accounting-Based Internal Control and Risk Management Procedures
      • Corporate Planning
      • Outlook – Opportunities and Risks
        • Economic development and financial markets
        • Property and property financing markets
        • Development of business at Münchener Hypothekenbank
        • Disclaimer Regarding Forward-Looking Statements
  • ANNUAL STATEMENT OF ACCOUNTS
    • Balance Sheet
    • Income Statement
    • Statement of Development in Equity Capital and Cash Flow Statement
    • Notes
    • Independent Auditor´s Report
    • Affirmation by the Legal Representatives
    • Annex to Annual Financial Statements Pursuant to Art. 26a para. 1 Sentence 2 of the German Banking Act (KWG)
Business Development

Refinancing

The Pfandbrief markets were once again dominated by the ECB’s Covered Bond Purchase Programme (CBPP3) in 2017. Markets were additionally influenced by political developments in Europe, especially elections in Germany, France and the Netherlands. Despite this difficult environment we found ample windows of opportunity to place new issues, which we used to refinance our activities at attractive conditions.

We floated our first benchmark issue of the year under review in May with a € 500 million Mortgage Pfandbrief that had a term of ten years and carried a coupon of 0.625 percent. The issue was priced at 12 basis points below the mid-swap rate. Thirty-four orders were received from investors in nine countries with Germany accounting for 83.5 percent of the volume sold followed by countries in Asia and the Middle-East. Excellent market con­ditions allowed the Bank to tap the issue by an additional € 250 million in October. The success is reflected by the price, which was set at 17 basis points below the mid-swap rate.

We successfully issued another Mortgage Pfandbrief in benchmark format in August, which is actually the classical summer vacation month in the capital market. Demand in the market was so great that we issued a volume of € 750 million. The Mort­gage Pfandbrief had a term of nine years and two months and again carried a coupon of 0.625 percent. Market interest was reflected by the 64 orders received form ten countries, with Germany once again with the lion’s share of orders. The issue was placed at a price of 13 basis points below the mid-swap rate.

The share of foreign currency denominated issues declined in the year under review by a total of 13 percent as the attractiveness of refinancing in US dollars and pound sterling declined substan­tially in comparison to euro-denominated issues.

The Swiss franc was the primary currency for our foreign currency denominated issues as we placed a total volume of CHF 810 million. In January we issued a two-year Mortgage Pfand­brief with a volume of over CHF 250 million. We followed up this issue with an additional two-year Mortgage Pfandbrief that had a volume of CHF 250 million. Due to strong demand seen for this issue we tapped it for an additional CHF 50 mil­lion one day after the issue.

We successfully placed a seven-year unsecured Swiss franc denominated bond in September. The bond had a volume of CHF 160 million.

In October we entered new territory when we issued a 15-year Mortgage Pfandbrief in benchmark format with a volume of CHF 100 million. The issue was priced at 8 basis points below the Swiss franc mid-swap rate. The issue caused a commotion in the Pfandbrief markets as this marked the first time ever that a foreign issuer of covered bonds achieved a higher interest rate discount compared to the domestic Swiss Pfandbrief curve.

Only one large-volume bond matured during the previous business year: a Public Pfandbrief with a volume of € 0.5 billion matured in September.

The total volume of issues placed in the capital markets in 2017 amounted to € 5.6 billion, of which Mortgage Pfandbriefe accounted for € 4.2 billion in covered refinancing, while unsecured refinancing amounted to € 1.4 billion. During the period under review we once again did not issue any Public Pfandbriefe due to the direction of MünchenerHyp’s business strategy.

Capital Markets Business
New Mortgage Business
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