The staff of Deutsche Hypo ... ... the basis of our success

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Within the context of our strict approach to risk, all
debt instruments acquired have a minimum rating
of A in keeping with the Bank’s business policy.
Instruments with an AAA rating accounted for
30.7%, with AA ratings accounting for 45.3% and
A ratings making up 24 % of new business.
Public sector loan pool by rating class
Total volume € 21.3 billion
As well as using the ratings provided by the leading
rating agencies, we also base our credit decisions
on an internal scoring model.
AAA 22.0 %
AA+ 13.3 %
AA 28.2 %
AA- 26.0 %
A+ 2.3 %
A 6.3 %
A- 1.9%
·· REFINANCING
An increasing preference among investors for
high-quality assets and for risk-based issue markups
characterised 2005. The spread differentiation in
the international covered bond markets – in con-
trast to previous years – rose markedly. It should
be noted that market making and the resulting
secondary market spreads for players like
Deutsche Hypo with excellent credit ratings conti-
nue to function without any problems. The focus
on issues with good credit ratings increased, so
that a pleasing level of demand for Deutsche Hypo
issues was in evidence throughout the year.
Since the abolition of the Gewährträgerhaftung
(guarantee obligation of the owner) with regard to
Landesbank issues, investors are increasingly tur-
ning to the Pfandbrief. Another source of competi-
tion is emerging, as the developing European
covered bonds market expands and joins the
ranks of those competing for investors' money.
Deutsche Hypo is well positioned in this regard,
with the result that the competition is actually pro-
ving beneficial to business. In a global context,
covered bonds as an asset class are becoming
ever more present.
An efficient and optimised refinancing strategy
remains the basis on which to compete on the
international capital markets.
Our product range, which is continuously being
extended and adjusted in line with investor needs,
is the foundation on which our demand-oriented
issuing activity is based.