FMS Wertmanagement today (Tuesday) announced the launch of a cash tender offer for eight covered bonds in four currencies with Eu3.3bn outstanding issued by Depfa ACS Bank and Depfa Pfandbrief Bank International, a move an analyst said could benefit the institution and investors.

FMS Wertmanagement is the German government’s winding-up institution for the nationalised Hypo Real Estate Group, of which Depfa was a part.

The institution is seeking to repurchase seven Depfa ACS Bank outstandings:

A Eu1bn 4.875% 2019 issue, of which Eu1bn is outstanding (DE000A0BCLA9), at a spread of 0bp to mid-swaps

A CHF300m 2.125% 2017 issue, of which CHF266.645m is outstanding (CH0022738105), at a spread of 10bp

A CHF200m 2.375% 2019 issue, of which CHF200m is outstanding (CH0024021302), at a spread of 15bp

A CHF200m 3.250% 2031 issue, of which CHF200m is outstanding (CH0026116084), at a spread of 20bp

A 5.125% 2037 issue, of which $962.601m is outstanding (US249575AN19), at a spread of 80bp

A 5.250% 2025 issue, of which C$300m is outstanding (CA249575AG69), at a spread of 50bp

A 4.900% 2035 issue, of which C$350m is outstanding (CA249575AJ09), at a spread of 85bp

The wind-down entity is also seeking to repurchase lettres de gage publiques issued by Hypo Pfandbrief Bank International:

A CHF400m 3.125% 2020 issue, of which CHF397m is outstanding (CH0026463577), at a spread of 75bp

The offer period will conclude on 1 February, with results expected to be announced for the US dollar and Canadian dollar issues on 2 February and “as soon as reasonably practicable” for the euro and Swiss franc issues.

FMS Wertmanagement said that with the tender offer it “aims to enhance the unwind of Depfa Bank plc and its subsidiaries by purchasing outstanding Depfa group covered bonds and notes to manage and optimise the liabilities of the Depfa group”.

An analyst said the tender offer made sense not just for the wind-down entity, but also for Depfa bondholders.

“In my understanding they want to accelerate the wind-down, which is understandable,” he said. “Meanwhile, if you are an investor and your bonds are in wind-down, you are always at risk that their rating will be terminated.

“For investors who need a rating, this tender is an opportunity to get out, while others can take a look at whether it is attractive to participate – and I think this will look attractive, because if you hold a large position it would before have been difficult to sell without a discount, and now you can sell with a pick-up.”

Depfa ACS Bank covered bonds were rated Aa2, as of October 2015, according to Depfa’s website.

Deutsche Bank is dealer manager.

FMS Wertmanagement said it may conduct further buy-backs, in particular of covered bonds with maturities in 2020 and beyond, and by way of bilateral agreements with current holders of such bonds and notes or otherwise.