The trustee appointed expert for the securitization transaction Estate UK-3 (UK-3), which hedges the credit risk exposure of a real estate loan portfolio via credit linked notes, today informed on its findings. It found the allocation of the full amount of a credit loss of GBP 113.8 million permissible. The loss allocation leads to a corresponding reduction of the repayments under the credit linked notes. The expert thereby fully affirmed the position of Deutsche Pfandbriefbank AG (pbb), the issuer of UK-3.
 
pbb will allocate the loss to the credit linked notes at the earliest possible date, which is 20 September 2019. The loss allocation will lead to a full write-down of the credit linked notes of classes A2, B, C, D and E and will reduce the nominal amount of class A1+ from GBP 400,000 by about 0.1 %.
 
With the loss being allocated to the credit linked notes, there will be no negative impact on pbb's results.
 
A predecessor institution of pbb had entered into UK-3 to hedge the credit risk exposure of a real estate loan portfolio via credit linked notes in 2007. The real estate loan portfolio subsequently suffered a loan default. pbb envisaged allocating a loss of GBP 113.8 million resulting from the default to the credit linked notes. Deloitte GmbH Wirtschaftsprüfungsgesellschaft, the trustee of UK-3, expressed doubts with respect to the permissibility of the loss allocation (please refer to pbb's ad-hoc announcements dated 18 January 2016 and 13 December 2016). In June 2017, the trustee therefore appointed an independent expert to determine, whether the conditions for a loss allocation were met.



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