Magazine article American Banker

German Regional Files U.S. Debt Issue

Magazine article American Banker

German Regional Files U.S. Debt Issue

Article excerpt

Landeskreditbank Baden-Wuerttemberg filed $1.5 billion in "Yankee bonds," part of a push by German regional banks into the U.S. debt markets.

Banking sources in New York and Frankfurt said that five or six other state-owned German banks are considering issuing debt in the United States.

Sudwestdeutsche Landesbank Girozentrale, another German regional bank, in December filed a shelf registration with the Securities and Exchange Commission for $250 million in 10-year subordinated notes.

An Attractive Prospect

The German regional banks hope to use the funding to strengthen capital and for lending, foreign exchange trading, and swaps.

"The market is highly liquid, the risk is state risk, and they find an open door here among investors because of their triple-or double-A ratings," said Jens A. Westrick, New York-based executive vice president of Norddeutsche Landesbank Girozentrale,

"I think the German banks have woken up to the fact that Inc. in London. "In particular, they've found there's no great cost differential between senior funding and subordinated debt."

U.S. Issues Proliferate

In general, falling interest rates and the potential to raise long-term debt at low cost have spurred a rush of U.S. issues by foreign banks.

About $900 million in Yankee bonds have been issued so far this year, according to Securities Data Co. This comes on top of $8.5 billion last year, which was a 67% increase over 1991. …

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