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Meeting DEPFA BANK’s short-term funding needs Back  
DEPFA BANK launched its euro commercial paper and certificates of deposit programme back in 1995, overcoming the difficulties at the time of selling to Irish investors by issuing in the name of the main German subsidiary, DEPFA Deutsche Pfandbriefbank AG. Today the programme stands at approximately €15 billion, and forms an integral part of the bank’s short-term funding strategy writes Jackie Hughes.
DEPFA BANK is a leading financial services provider to public sector authorities worldwide. Based in Dublin, the bank operates a network of subsidiaries and branch offices across many European countries, as well as in the US and Japan. DEPFA’s range of products and services covers all the financing needs of public-sector clients: from budget financing to the funding of public infrastructure projects and investment banking solutions for public-sector authorities. Thanks to the clear focus of its business model, DEPFA BANK enjoys a prominent position in an attractive market where only a few participants are really successful

The successful launch of Ireland’s new covered bond product in 2003, the ACS (Asset Covered Security) resulted in significant press coverage for DEPFA. While the ACS is a source of long-term benchmark funding for the group, DEPFA also has a well-established, diversified source of short-term funding through its Euro Commercial Paper Programme.

15 bn Euro CP/CD dual programme
DEPFA BANK plc has been an active issuer of Euro Commercial Paper (CPs) and Certificates of Deposit (CDs) since the launch of its programme in December 1995, with an initial programme size of $750 million. In response to increased investor demand and DEPFA’s short-term funding strategy the programme size has gradually been increased and now stands at €15 billion, with outstandings at year-end 2003 of approximately €12 billion. (See table 1).

The products sold under the programme include both zero coupon and coupon bearing Certificates of Deposit and Commercial Paper and the securities are issued in equal volumes. The programme is very popular with institutional investors, in particular asset and pension managers due to its large size, deep secondary market and implicit liquidity. The programme has been rated by all three major rating agencies and enjoys the same excellent short-term ratings as DEPFA BANK plc, A1+/P1/ F1+. Central banks, corporates and private banks are also active investors in the programme. (See table 2).

At present, the bulk of issuance is euro, dollar and sterling denominated, nevertheless DEPFA quotes for all major currencies on a daily basis to institutional investors worldwide. Minimum denominations are €500,000 or dollar 500,000 however, typical dealing size is considerably higher. (See table 3).

In the past DIRT issues prevented Irish resident institutions from issuing Euro Commercial Paper and Certificates of Deposit to Irish resident investors. Despitee this obstacle DEPFA has been issuing CP and CDs directly to Irish investors since 2000. The group overcame the DIRT issues by issuing in the name of the main German subsidiary, DEPFA Deutsche Pfandbriefbank AG. In future, DEPFA will continue to issue in the name of DEPFA BANK plc and DEPFA Deutsche Pfandbriefbank AG, offering investors the choice between Irish or German risk.

The investor driven focus of the Group means that DEPFA also offers a wider range of money market products including USCP and Eurodollar CD, which are targeted specifically at United States resident investors. DEPFA is also active in the Repo market, facilitating the efficient use of the public sector assets held on its balance sheet. Finally, the Group intends to launch its French domestic CD programme in Quarter 1 2004, in response to developments in the French market.

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