(by Helen Russon)   

 

 In Germany multi-national banking giants are exposed by mid-sized banks which are starting to offer high-yield underwriting capabilities to domestic Mittelstand corporates.

Last week, Westdeutsche Landesbank and HypoVereinsbank were joint leads on Gildemeister’s €175 million seven-year 9.75% issue. No investment bank with a well-established high-yield platform was included in the syndicate - for the first time in Europe.

    Gildemeister’s bonds were placed with 95 clients in 13 countries and only 30% of the deal had been placed in Germany, with another 30% picked up by high-yield investors in the U.K.

    The advantage that German banks have over their competitors in underwriting high-yield deals for German SMEs is that they have been providing loan financing for almost half a century and therefore have strong relationships with the issuers. Moreover, some analysts said that provision of liquidity for the bonds is critical, and the current German banks might not be in a position to ensure this.