FMS Wertmanagement floats first large-volume dollar bond on the US capital market following SEC registration
FMS Wertmanagement, the winding-up institution owned by the German government, on Wednesday floated its first large-volume bond issue directly on the US capital market. The issue was for the intended volume of US 2 billion. The issue with a five-year maturity was sold primarily to institutional investors in the United States with a coupon of 1.00 percent and at a spread of 37 basis points over comparable US government bonds.
This step to enter the US capital market was preceded by the required registration with the US Securities and Exchange Commission (SEC) a few days ago. The bond was issued via a special US program designed for medium term notes (MTN) which provides a documentation framework especially for states and their sub-entities for the repeated issue of bonds in the United States.
"By gaining access to the world's largest capital market, FMS Wertmanagement has rounded off its profile as a regular issuer of Federal government quality bonds in the agency segment," said Ernst-Albrecht Brockhaus, the Executive Board member of FMS Wertmanagement responsible for Treasury/Capital Markets and thus for funding. "This step not only marks a diversification of our funding base, it also brings us considerably closer to our goal of funding our wind-up portfolio largely at matching currencies. But above all, the recognition of our quasi-sovereign credit profile by the SEC and US investors is clear proof that the concept followed by the German government's winding-up institution is both consistent and successful."
The US dollar-denominated portion of the wind-up portfolio to be refinanced currently amounts to around USD 48 billion. Utilising a variety of funding instruments in the original currencies enables FMS Wertmanagement to reduce funding costs and funding risks substantially.
The bond issue was managed by a syndicate of lead managers comprising Citigroup, Deutsche Bank, Goldman Sachs and HSBC.
FMS Wertmanagement was established in 2010 as the German government's winding-up institution in order to unwind a portfolio worth EUR 175.7 billion (at the transfer date) that was transferred to it by the Hypo Real Estate Group. As at the half-year balance sheet date of 30 June 2012, the volume amounted to EUR 151.4 billion.
The information contained in this document does not constitute an offer of securities for sale. Securities may not be offered or sold in the United States absent registration or an exemption from registration. FMS Wertmanagement has registered the securities that are the subject of this document for sale in the United States. The offering of the securities in the United States was made by means of an offer document that may be obtained from FMS Wertmanagement, Prinzregentenstrasse 56, 80538 Munich, Germany and that contains detailed information about FMS Wertmanagement and its management, financial statements and information about the Federal Republic of Germany.
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