Germany's biggest bank--Deutsche Bank-- rejects speculation of difficulties in US junk bonds

FRANKFURT, Oct 11 (AFP) -

The chairman of Deutsche Bank, Rolf-Ernst Breuer, in a newspaper interview published on Wednesday rejected speculation that the biggest bank in Germany was facing difficulties in its high-yield or junk bond business in the US.

Breuer told the financial daily Boersen-Zeitung that rumours that Deutsche Bank might face more than one billion dollars (1.2 billion euros) in losses form exposure to a US junk bond were attempts by rivals to discredit the bank. Shares in Deutsche Bank fell sharply on the Frankfurt stock exchange on Tuesday after a newspaper said that Deutsche Bank might be on the hook for more than one billion dollars after an aggressive financing commitment it made to wireless telecom company MainStream PCS Holdings LLC.

While a number of US investment banks, such as JP Morgan and Chase Manhattan had turned down a chance to arrange 1.5 billion dollars in junk bonds and syndicated loans for MainStream, Deutsche Bank, which is aggressively trying to push into the bulge bracket of high-yield or junk bonds, stepped in and offer to the whole financing itself.

It won the deal by committing itself to provide a syndicated loan of 1.025 billion dollars and a bridge loan of 435 million dollars to MainStream.

But so far MainStream had been unable to sell its junk bonds to investors, who viewed the deal as risky in an already tough market, the newspaper said.

And that had had a cascade effect on the rest of the financing package.

Breuer told the Wednesday edition of Boersen-Zeitung that there was no reason to expect any difficulties in its US bond business.

"We're not just fair weather sailors," he said, but he was confident that the bank could emerge from current placements without any losses.

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-- Carl Jenkins (Somewherepress@aol.com), October 11, 2000