Hogan Lovells advises banks on placement of a GBP 500 million SONIA mortgage covered bond of Deutsche Pfandbriefbank AG

Led by Frankfurt partner Jochen Seitz international law firm Hogan Lovells has advised the joint lead managers Credit Suisse, HSBC, NatWest Markets Plc and Nomura on the subscription and placement of a mortgage covered bond of Deutsche Pfandbriefbank AG, whose interest rate is linked to SONIA (Sterling Overnight Index-Average).

The mortgage covered bond has a nominal value of GBP 500 million and is due in 2023. This makes Deutsche Pfandbriefbank AG one of the first continental Europe based banks to issue a benchmark-bond linked to SONIA. SONIA is an alternative benchmark to LIBOR which will cease to exist after the end of 2021. It is calculated by the Bank of England based on interest rates for unsecured overnight transactions. Unlike LIBOR which is fixed in advance for a set period (e.g. 3 months), SONIA is measured on each day over the interest period to produce a final interest rate at the end. It is a (nearly) risk-free rate as it does not include any term bank credit risk or liquidity premium.

The team around Jochen Seitz has been dealer counsel under the debt issuance programme of Deutsche Pfandbriefbank AG arranged by Commerzbank for many years.

Hogan Lovells Team for the banks

Dr. Jochen Seitz (Partner), Dr. Stefan Schrewe, Frank Salzgeber (Associates) (all Capital Markets, Frankfurt)


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