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EuroCredit MTS Expands Listing Criteria to Address Market Evolution

London, April 21, 2004 – EuroCredit MTS is pleased to announce the expansion of its listing criteria to include euro-denominated covered bonds of at least € 2 billion in size from benchmark issuers. The move comes in response to a change in market conditions, which has resulted in an evolution of covered bond benchmark definitions.

EuroCredit MTS, established in May 2000, had previously only admitted covered bonds of at least € 3 billion in outstanding size. However, as benchmark covered bonds are now typically issued in sizes from € 1.5 billion to € 2 billion, EuroCredit MTS has responded accordingly to the shift in issuance patterns. While smaller in size, today’s covered bonds behave just like the larger benchmarks: the issues are priced and quoted by a majority of dealers and are subject to exactly the same market making commitments as those issues above the € 3 billion mark. Covered bonds remain distinct from the eurozone government bond sector, where benchmarks, as traded on EuroMTS, are characterized by a size of € 5 billion or larger.

"Our seven bonds already benefit from the liquidity and transparency characteristic of the EuroCredit MTS market," said Henning Rasche, board member, Eurohypo AG. "We are thus pleased that EuroCredit MTS has recognized the modification to covered bond benchmark definitions and has addressed this with a change in listing criteria."

"Transparency and liquidity have become very important factors in the covered bond market. At the same time the trend to issue bigger and bigger Jumbos has abated for some years, resulting in a growing number of issues of up to € 2 billion. We are therefore pleased that EuroCredit MTS has moved to address this development," said Dr. Otmar Stöcker, managing director, Association of German Mortgage Banks (VDH). "Now, even more Jumbo-Pfandbriefe issued by German Mortgage Banks can benefit from the transparency and liquidity resulting from the commitment of EuroCredit MTS market makers, further enhancing the international appeal of Jumbo-Pfandbriefe."

"The benchmark market for covered bonds features issues smaller in size than was typical several years ago. We therefore appreciate that EuroCredit MTS has decided to address this shift," said Hartmut Rahner, head of treasury of DG HYP in Hamburg. "The possibility of an increased number of participating bonds promises a benefit for the investor, resulting from even higher liquidity and more transparency on the EuroCredit MTS market."

While the minimum issue size shifts down to € 2 billion, the main eligibility and listing criteria for EuroCredit MTS will be maintained. As with larger benchmarks, covered bonds of € 2 billion must secure the commitment of at least seven market markers, must be issued in the last 12 months and are required to have a minimum rating of triple A by one of the rating agencies. In addition, to be considered a benchmark, the bond’s issuer must have at least € 10 billion in total outstanding debt, or € 8 billion with the commitment to reach €10 billion within 12 months from first listing, or must have at least one Eligible Security outstanding and plans to issue at least one new Eligible Security in each 12 month period subsequent to the first listing on EuroCredit MTS.