Print Page Close Window

WaMu Settles Groundbreaking European Covered Bond Sale

Business Editors

SEATTLE--(BUSINESS WIRE)--Sept. 27, 2006--Washington Mutual, Inc. (NYSE:WM) announced today that it has settled its groundbreaking sale of EUR 4.0 billion ($5.1 billion) of euro-denominated covered bonds.

WaMu is the first US-based bank to complete a transaction in the $1.7 trillion European covered bond market.

"We are very pleased with the results of our first offering to the European covered bond market, and we look forward to future successful issuances as we continue diversifying our funding sources," said Kerry Killinger, WaMu's chairman and CEO. "Our entry into the European covered bond market is the latest in a long history of innovative thinking at WaMu."

Killinger noted that the depth and liquidity offered by the European covered bond market were compelling as the company considered alternative funding sources. He added that WaMu plans to be a regular issuer in this market to complement its other borrowings in the US.

"This program should make our debt more sought after on a global basis, ultimately reducing our company's cost of funds, as well as increasing our investor base beyond the US," Killinger said, noting that the company also successfully issued a EUR 1.5 billion five-year unsecured bond in late August.

The company's rating agencies have worked cooperatively in support of WaMu's program. The company also worked collaboratively with the FDIC and the Office of Thrift Supervision (OTS) as it developed its European covered bond program.

"The demand we saw in this issuance was outstanding," said Robert Williams, Senior Vice President and Treasurer of WaMu. "The covered bond market represents a key diversification tool for us in the context of our overall funding strategy."

Covered bonds differ from traditional mortgage-backed securities in that the loans used to secure the obligations remain on WaMu's balance sheet, allowing the company to maintain control over the assets. The covered bonds are issued by WM Covered Bond Program, a special-purpose entity which, in turn, purchases floating rate US dollar denominated mortgage bonds issued directly by Washington Mutual Bank. These mortgage bonds are recourse obligations of WaMu that also enjoy the protection of loan collateral, unlike traditional securitizations where investors only have recourse to cash flows from underlying loans. The program then engages in a cross-currency swap, providing investors with a fixed rate euro-denominated security.

The issuance was arranged by Barclays Capital, with ABN Amro and Deutsche Bank joining Barclays as joint leads.

Key Facts:

Size: EUR 4 billion ($5.1 billion)

Issuer: WM Covered Bond Program

Rating: AAA/Aaa/AAA

Maturity: Series 1: 5 years, EUR 2.0 billion

Series 2: 10 years, EUR 2.0 billion

Underlying Collateral: Prime 1st Lien Mortgages

About Washington Mutual

Washington Mutual, through its subsidiaries, is one of the nation's leading consumer and small business banks. At June 30, 2006, Washington Mutual and its subsidiaries had assets of $350.7 billion. The company has a history dating back to 1889 and its subsidiary banks currently operate more than 2,600 consumer and small business banking stores throughout the nation. Washington Mutual's press releases are available at

CONTACT: Washington Mutual, Inc.
Media Contact:
Alan Gulick, 206-500-2760
Investor Relations Contact:
Alan Magleby, 212-326-6019

SOURCE: Washington Mutual, Inc.