The bank, during an investor road show for issuing Pfandbrief, said that it is planning to sell bonds worth €2 billion to refinance €16 billion through capital markets.
This is in sharp contrast to its earlier decision of not going for government’s help and limiting its options to an increasingly difficult funding market, at a time when most of the European banks have been getting government debt guarantees to refinance themselves.
In spite of crisis in other funding markets, the Pfandbrief market has continued to operate profitably, promising a secure port even during the worst financial turbulence in decades. Commerzbank and other state-sector lenders such as HSH Nordbank and BayernLB are issuing billions of euros in state-guaranteed bonds at favourable terms.
However, the Pfandbriefs are now witnessing intense competition because of the government’s bank rescue program, which allows banks to issue up to €400 billion in state-backed bonds in 2009.
