FMS Wertmanagement repurchase of €3.3 billion Depfa bonds

Overview:

• German bad bank FMS Wertmanagement bought €3.3 billion bonds issued by Dublin based lender Depfa Bank back from the market.
• The bonds were denominated in euros, Swiss francs, and US and Canadian dollars, with maturities ranging from October 2017 to March 2037.
• Deutsche Bank managed the deal. 
• FMS was established in 2010 to wind-down the liabilities of nationalised German lender Hypo Real Estate (HRE), which owned Depfa before it was transferred to FMS in 2014.   
• HRE received a €10 billion bail-out and €145 billion in liquidity guarantees from the German government after the financial crisis.
• The conditions of HRE's bail-out included divesting of Depfa by 2014, but the German government opted to wind-down the lender's assets, which it said would lessen the proportion of the cost of the bank's failure on taxpayers. 
• By the end of the the third quarter of 2016, FMS reported it had reduced the value of HRE's assets by half in six years. 

Ben Naylor - Regional Editor