Updated: Telefonica and VW Immo raise questions about Schuldschein pricing

Post Date: 18/04/2018

By Ioannis Gougoulias

The analysis below was retrieved using CMDportal's Data Sheet and Instrument Search tool. In particular we used the filter Distribution = Schuldschein.

Telefonica and VW Immo also raise questions about pricing.

One reason for a slower market will no doubt be the collapse of Carillion and the worries about Steinhoff’s financial condition. Despite the fact that, defaults and debt restructurings have happened in the market before 2017 (but in a small scale), the cases of Carillion and Steinhoff differ.

According to market specialists, Carillion’s collapse is not enough to disrupt the market. This is not the case for Steinhoff, though, whose exposure to the market is far greater. Steinhoff raised EUR730m in 2015 with many - over 100 - international, including Chinese and Taiwanese, investors. 


According to recent reports, Steinhoff is planning to sell part of its Africa Retail operation. The proceeds of the sell will be used to repay some of its USD1.3bn South African bond. But will the restructruring efforts be able to save Steinhoff? 

Although, the market appears slow, demand remains strong. According to Bloomberg, who ran a mini survey, 22 out of the 30 Schuldschein investors said that they plan to increase their exposure to the product.

Additionally, what the market has brought in 2017 – an effect that continues in 2018 - is the tightening of spreads, which contrasts with recent cases of Carillion and Steinhoff. According to data, the number of investors in the market right now is larger than ever. As a result, the vast variety of investors create favourable conditions for issuers, who can achieve better spreads for their Schuldschein products, leading to investors complaining that they are left out of the market. The yields offered by borrowers and deal arrangers are far too tight for them.

In the last three months, however, we have seen two examples of borrowers, who were forced to issue a second round of price guidances. Telefonica Deutschland in early January 2018 and Volkswagen Immo in early April 2018 had to change the terms of their Schuldschein Notes, as the margins offered in both cases were not large enough to entice buyers.

The following excerpt is included in CMDportal's 2018 Winners in Debt Capital Markets hard copy publication. To access the full PDF version follow this link: 2018 CMD Awards.

The collapse of Carillion raises questions about the impact for the market. Although the market is known for its minimal troubled issuers, the financial difficulties at Carillion could affect the Schuldschein market’s growth in 2018. In January 2017, UK Carillion Plc secured a Sterling Schuldschein financing for a total of GBP112m. In November of the same year, Carillion filed for bankruptcy.

Asian Lenders in particular are thought to have heavily coughed up for Carillion‘s GBP112m financing. As such German investors are perhaps not as much in the fry. However, Taiwanese investors have gone on record to state that they have little exposure.

Elsewhere we also read that Chinese investors bought about a quarter of Steinhoff’s EUR755m Schuldschein, when it was issued in 2015. These notes are currently quoted at a discount of about 50 percent. The Stellenbosch-headquartered global retailer has seen its share price plunge by over 80% since early December 2017, when its former CEO Markus Jooste abruptly quit amid talk of an accounting scandal. Half a year earlier, in July 2017, Steinhoff Europe raised EUR40m through a Schuldschein. In total Steinhoff have EUR770m of Schuldschein outstanding.

Where is this data coming from?

CMDportal is the global bond and money market utility connecting issuers, dealers and investors. The service aggregates data from a wide range of sources, including issuers, dealers and fund investors recording both who issued, who traded and who bought the instruments.

Can i produce a Debt Capital Markets statistical query like this?

Yes you can. CMDportal provides a wide range of tools to analyse bond and money markets. Data Sheet results can be downloaded as an XLS file.

Mr. Gougoulias is an Analyst at CMDportal. He can be reached at