What is the Pfandbriefe market?
What will be an ideal response?
The German mortgage-bond market, called the Pfandbriefe market, is the largest covered bonds market. In fact, it is about one-third of the German bond market and the largest asset in the European bond market.The bonds in this market, Pfandbriefe, are issued by German mortgage banks. There are two types of Pfandbriefe that differ based on the borrowing entity for the loan. Public Pfandbriefe are bonds fully collateralized by loans to public-sector entities. When the bonds are fully collateralized by residential and commercial mortgages, they are called Mortgage Pfandbriefe.
The Pfandbriefe market is further divided into Traditional Pfandbriefe and Jumbo Pfandbriefe. The former represents the market for issues of smaller size. Historically, it has been an illiquid and fragmented market and, as a result, has not attracted much interest from non-German investors.
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