France, Spain, and most recently Luxembourg, now compete with the German Pfandbrief for the attention of international investors wishing to put funds into high-credit-quality collateralized bonds. These countries’ new covered bonds have successfully been launched in jumbo format, spreads have tightened to German Pfandbrief levels and volumes are set to grow further.
The three new markets hardly present
an immediate threat to the original Pfandbrief market, which is now worth e1 trillion ($840 billion) – e367 billion of which fall in the jumbo sector where liquidity is adequate to attract non-German investors.
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