Pfandbrief - Financial definition
Concise definition of the term Pfandbrief
Pfandbriefe are covered bonds issued by German mortgage banks and certain public banks. They are collateralized by long-term assets such as property mortgages or public sector loans. They are regulated by special legislation, the Pfandbrief Act, and make up the largest and most established covered bond market in Europe.
Comprehensive definition of the term Pfandbrief
Pfandbriefe can only be issued by three categories of issuers: 27 private mortgage banks and certain public banks amongst which the 12 Landesbanken.
There are two types of Pfandbriefe, depending on the collateral:
- Öffentliche Pfandbriefe are bonds which are fully collateralized by loans to public-sector entities.
- Hypotheken-Pfandbriefe are fully collateralized by residential and commercial mortgages, whose loan-to-value ratio must not exceed 60%.