Commerzbank is building on a public sector Pfandbrief platform acquired with Deutsche Schiffsbank to provide its export finance business with access to Pfandbrief refinancing, an official the bank told The CBR ahead of a roadshow next week.

Commerzbank will be on the road to introduce the public sector Pfandbrief platform to investors, ahead of issuing what will be the first benchmark Pfandbrief launched under the Commerzbank name.

Some Eu1bn of public sector Pfandbriefe for which Commerzbank is liable are already in circulation, according to the issuer’s first quarter cover pool report, but these were acquired as a result of a merger with Deutsche Schiffsbank, whose ship and public sector Pfandbrief licences were transferred to Commerzbank. The public sector cover pool stood at Eu1.27bn as at the end of March, making for overcollateralisation of 23.2%.

Commerzbank is also working on setting up a platform for mortgage Pfandbriefe, but this will take more time as the issuer has to build the cover pool from scratch and because its residential mortgage portfolio is more granular than its public sector assets portfolio, Rainer Mastenbroek, head of covered bond funding at Commerzbank, told The Covered Bond Report.

“The public sector Pfandbrief will be our first Pfandbrief because we already have a basis for it,” he said.

“We are relaunching the programme under the Commerzbank umbrella because we want to make Pfandbrief refinancing available to our Mittelstandbank, which has a large export finance business.”

Some of the loans originated in this division are backed by sovereign-guaranteed export credit agencies (ECAs), and Commerzbank’s focus will be on adding such loans to the public sector Pfandbrief cover pool, said Mastenbroek.

“We will not be adding more of the typical public sector assets to the pool, because there is a special purpose to this Pfandbrief platform,” he said.

ECA-guaranteed loans already feature as covered bond collateral at other issuers, such as BNP Paribas Public Sector SCF and Crédit Agricole Public Sector SCF.

Commerzbank is in the process of transferring a first batch of loans to the public sector Pfandbrief cover pool, said Mastenbroek and these are loans guaranteed by Euler Hermes, Germany’s ECA.

“That is advancing pretty well so we decided it is time to see investors,” he said. “When those loans are added to the pool we will have enough collateral to launch a first issue.”

As concerns mortgage Pfandbriefe, Commerzbank hopes that by the end of the year it will be in a position to issue.

“We are on track,” said Mastenbroek. “We always said we wanted to issue mortgage and public sector Pfandbriefe by the end of the year.”

Commerzbank launched an SME backed covered bond programme in February that is structured outside Germany’s Pfandbrief legislation.