Revealed: the structure behind Commerzbank's covered bond

Author: Gemma Varriale | Published: 21 Feb 2013


  • Commerzbank has structured a long-awaited new covered bond, using SME loans for the first time in Germany;
  • Under Germany's covered bond legislation, SME loans are not eligible as collateral to back the instruments;
  • A special purpose vehicle will guarantee the bonds issued under the programme;
  • Although the programme has been launched, there is no issue yet. Fitch's pre-sale report gives a comprehensive insight into the structure
  • A number of market participants are considering setting up their own programmes, with the option of using different collateral to back the bonds.

Commerzbank's innovative new funding instrument marks the first time a covered bond-securitisation hybrid has been structured in the German market. IFLR spoke to the key firms involved to find out exactly how it was done, and how the bonds could evolve in the future.

The 5 billion programme from Germany's second biggest bank uses loans from small and medium-sized...