While deep in products, it is worth noting the current revival in the schuldschein market in Germany. As Germany’s small and medium-sized companies – the Mittelstand – find that bank loans are less forthcoming, this tradable loan form is once again becoming popular and banks are structuring them as securitisations and in mezzanine form.
“The schuldschein is enjoying something of a renaissance. The beauty is you can keep it [on your balance sheet] or sell it,” says Roman Schmidt, head of Commerzbank Securities Germany.
The other attractions are that the documentation is simple –just two pages – they can be standardised and pooled and, best of all, they don’t need to be marked to market. Their nearest international equivalent is the Medium Term Note (MTN) and pricing of the two instruments is currently very similar. If German marketers could persuade more foreign issuers of the benefits, who knows? The humble schuldschein could follow the pfandbriefe onto the world stage.
