Covered bonds invade new markets

FOR A PRODUCT that is nearly 250 years old and originated in the gloomy surroundings of east Prussia, covered bonds have enjoyed a remarkably vibrant year. New, national species of what was once thought of as a dowdy and homogeneous product proliferated in 2003.

Covered bonds made their debut in Austria, Ireland, and the UK. Spain had its first public-sector loan-backed issue. Germany, where Pfandbrief issuance is still colossal, is changing its mortgage bank legislation to invigorate the market in 2004.