German government extends Federal Guarantee for notes issued by Hypo Real Estate Group

The German government has extended its guarantee for notes issued by Hypo Real Estate Group until 31 December 2009. The guarantee collateralises EUR 15 billion in notes issued by Hypo Real Estate Bank AG which were subscribed by a consortium of German banks and insurance companies. The guaranteed notes form part of the EUR 50 billion liquidity facility which has been provided by the consortium and Deutsche Bundesbank since 13 November 2008. Even though the overall facility was set up to run until 31 December 2009 from the beginning, its validity was set for an initial expiration date on 31 March 2009, in line with applicable EU law.

The extension of the term of the guarantee has also automatically extended the term of an additional EUR 15 billion in notes which were also subscribed by the consortium. The German Federal Ministry of Finance has indicated that it is prepared, in principle, to also extend the term of the guarantee
covering the remaining EUR 20 billion of the liquidity facility. A final decision, and the signing of agreements, is expected within the next days.

Dr Axel Wieandt, CEO of Hypo Real Estate Group: "Our thanks go to the German government for the trust placed in our bank, as demonstrated by the extension of the credit facility. At the same time, we take this as a positive signal for the negotiations with SoFFin regarding long-term capital and
liquidity support, which are at an advanced stage.

source : Hypo Real Estate