US banks pay for covered charge

Bank of America readies a benchmark

THERE ARE NOW no significant debt houses that feel comfortable ignoring covered bonds – an increasingly important product for banks. However, sceptics are asking if they will stick around this time. Many US banks have tried covered bonds before. Around the birth of the jumbo Pfandbrief in 1995 a number of banks ramped up their efforts but soon retreated. And who could blame them? Issuers took full advantage of the increased competition by slashing fees or even asking for a subsidy.