Covered bonds: Picking up tacks in front of the steamroller

Covered bonds: An alternative to corporates

“THE SAFEST ASSET on the capital market.” That, embarrassingly, is how the German government’s website described the Pfandbrief in August. Visit the website today and the reference appears to have been deleted. It’s just as well. As the Commerzbank analysts who spotted the gaffe pointed out in research published soon afterwards, if the Pfandbrief is the safest asset class on the capital market, where does that leave German government bonds? Judging by the recent performance of some covered bond spreads, however, the market seems to have come close to taking the Bundestag’s website entry at its word.