Deutsche Pfandbriefbank sells distressed CDOs

 

Deutsche Pfandbrief bank, the core bank to emerge from nationalised German lender Hypo Real Estate, sold 759 million euros ($1.1 billion) worth of distressed structured assets as it works to regain a sound footing.

Pfandbrief bank said on Tuesday it sold the collateralised debt obligations (CDOs), consisting mainly of U.S. structured finance assets, to six winning bidders after an auction thatdrew interest from U.S. and European investment banks, asset managers and investment funds.

The sale follows a similar move earlier this month, when Pfandbrief bank sold 232.5 million euros of outstanding claims against Lehman Brothers.

"The timing of the transactions capitalised on the currentwave of interest in distressed assets as investors demonstrate renewed appetite for risk" Deutsche Pfandbrief bank said in a statement.

Lehman's collapse last year roiled markets and forced many banks, including Hypo Real Estate, to seek government bailouts.

Hypo Real Estate has since been fully nationalised.

"We continue to reduce the size of our balance sheet" Deutsche Pfandbrief bank Chief Executive Axel Wieandt said in the statement. "We are pleased to see our valuation of these CDOs confirmed by the market."

Pfandbrief bank said that prior to the CDO sale, Hypo RealEstate's CDO inventory had stood at around 2.64 billion euros,of which 1.44 billion were in U.S. CDOs and the remaining 1.20billion in European CDOs.

"The bank intends to continue to exploit opportunities which may arise to sell its remaining CDO exposure" it said.