`Pfandbrief Awareness Campaign' Offers Safe Haven to Beleaguered American Investors.

Business Editors

BOSTON--(BUSINESS WIRE)--Nov. 6, 2002

As part of a drive to attract American investors on the lookout for a safe haven for their money, a `Pfandbrief Awareness Campaign' was launched at a conference in Boston today.

The Pfandbrief is a European bond backed by mortgage and public-sector collateral, which offers triple-`A' security as well as higher yields than government bonds, and is viewed by many U.S. investors already familiar with it as an ideal antidote to uncertain equity markets.

On July 1st this year, the strict German legal framework - which ensures the high quality of the asset class - was changed, now allowing mortgage banks to include U.S. assets within the Pfandbrief. Because of this, a significant rise is expected in dollar-denominated Pfandbriefe, and therefore an accelerated take-up of the Pfandbrief in the United States.

With outstanding issues of over $1 trillion (EUR 1.106 trillion), the Pfandbrief represents Europe's largest fixed-income market and is a household name for European investors. It is now generating an increased level of interest among U.S. investors. Dr. Louis Hagen, general manager of the Association of German Mortgage Banks, which is running the Pfandbrief Awareness Campaign, comments:

"There is a strong feeling from knowledgeable U.S. fixed-income investors that the Pfandbrief's time in the United States has come. With the uncertain equity market, investors are looking for solid returns and lower risk - and for many of them, the Pfandbrief offers an ideal safe haven in these challenging times.

"We understand that there is a great deal of educating to be done," adds Hagen. "For instance, the Pfandbrief is often confused with mortgage-backed securities, which do not possess the enhanced safety benefits that the German Mortgage Bank Act provides the Pfandbrief. It is also confused in the United States with treasury-style bonds, which offer yields almost 50 basis points lower than the Pfandbrief, with roughly an equal level of risk.

"However, we have found that once U.S. investors take the time to understand the unique characteristics of this product, they become strong Pfandbrief advocates. Now we want everybody to know about it."

The Pfandbrief Awareness Campaign conference in Boston was attended by investment professionals with Pfandbrief experience, such as Putnam Investments and TIAA-CREF, and guest speakers including William Dudley, chief U.S. economist at Goldman Sachs.