Pfandbriefe come to China

Do mention the war, says Dr Louis Hagen, general manager of the Association of German Mortgage Banks of the 230-year old instruments: they have survived two world catastrophes without defaulting.

With foreign exchange reserves bulging with low-yielding US treasuries it is no secret that from Seoul to Singapore, Asia's central banks are casting around for something a little more exciting.

China, with over $400 billion stashed away, is a prime candidate for diversification and bankers at the forum organized by the Association of German Mortgages in Beijing on Thursday confirmed they had sold such products to the government - although they would not be drawn on how much.

The attraction of Pfandbriefe - Germany's favourite financing instrument - is that they offer great security with a nice yield pick up over German government 'bunds' or treasury bonds, points out Dr Louis...

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