The Legal Framework for Issuing Pfandbriefe

Jens Tolckmitt and Dr. Otmar Stoecker

Pfandbriefe are covered interest-bearing bonds. They are issued by credit institutions with a license to engage in Pfandbrief business (Pfandbrief Banks) and placed on the capital market. These credit institutions use them to fund certain loans that are secured by real estate liens, ship mortgages, aircraft mortgages and claims against public-sector bodies. Depending on the type of collateralization, these bonds are referred to as Mortgage Pfandbriefe, Ship Pfandbriefe, Aircraft Pfandbriefe or Public Pfandbriefe respectively. Most Pfandbriefe are issued in the form of bearer bonds, followed by registered bonds.