Pfandbrief Law Change Positive for Investors, Fitch Says

Changes to Germany’s Pfandbrief Act, adopted by the government this week, are positive for investors because they give them a better idea of market risk, Fitch Ratings said in a statement.

The amendment to Article 28 of the law requires banks to disclose more information about the assets packaged into the securities, according to the statement published today. Pfandbrief issuers will have to publish the proportion of fixed- rate assets in the covered bonds as well as the seasoning of real-estate loans and indicate potential currency mismatches, Fitch said.

There’s no provision for loan-to-value disclosure on mortgage assets in the law change, Fitch said. Investors have called for information on this because most covered bonds are secured by residential and commercial mortgages.

“We acknowledge the practical challenges of LTV disclosure,” Rebecca Holter, senior director of covered bonds at Fitch, said in the report. “Nevertheless, we think more details on LTVs would give investors a useful tool to compare mortgage Pfandbrief programmes.”

Fitch said it doesn’t expect any ratings impact from the law change.

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To contact the editor responsible for this story: Paul Armstrong at

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