In March 2009, Germany's Pfandbrief Act was amended to create a new class of pfandbrief backed by aircraft loan collateral. But putting together the first deal became a drawn-out process. Hanover-based NordLB has said that, market conditions permitting, it expects to offer €500m-worth of bonds during the first quarter of 2012. Another major aircraft lender, Frankfurt-based DVB Bank, is expected to follow shortly after with its own debt deal.
Both banks are among the top 10 global asset-based lenders in the aviation market, and pfandbriefe will constitute an important new source of refinancing for their aircraft loan books. The debut deals are expected to rely heavily upon domestic German bids, led by banks, insurance companies and funds. But the idea is to internationalise the product with subsequent dollar-based transactions, which may be of particular interest to US capital markets investors, as well as European accounts looking for some diversity in their covered bond holdings.
