Landesbank Berlin is set to create a new chapter for German structured covered bonds as it begins premarketing a new transaction that combines German covered bond (Pfandbrief) and securitization techniques. The new deal potentially opens the door to cheaper financing for the hundreds of German savings banks that are, at the moment, priced out of the more traditional German Pfandbrief market.

It is the first time that a covered bond program has been established in Germany under general German law, in contrast to many other European covered bonds that rely on specific legislation. The incorporation of securitization techniques has enabled the sponsor to create a covered bond that shares characteristics with covered bonds backed by a specific legal framework.

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