Germany announced plans to issue a 6 billion ($7.9 billion) securitization of pension fund contributions by the former Deutsche Bundepost, now Deutsche Telekom, Deutsche Post and Deutsche Postbank. The deal was expected to roadshow this week via joint lead managers Deutsche Bank Securities and Morgan Stanley.
The German postal pensions securitization is expected to offer three triple-A rated tranches with five-, 10 and 15-year bullet maturities for Bundes-Pensions-Service. Proceeds will be deposited into the pension scheme, in place of monies due from the government and principal will be repaid from future contributions made. The government took over a third of the Deutsche Post's and Deutsche Telekom's pension liabilities when they were privatized. Deutsche Post and Deutsche Telekom cover the remaining liabilities through yearly contributions - the future cashflows securitized in the transaction. Germany has reported 3% GDP growth for the last three years and industry sources said the government is hoping the European Commission will allow the transaction to count towards reducing some of its debt.