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Ireland: a high-quality covered bond package

The Irish covered bond, endlessly promised and hyped for the past couple of years, is set to emerge in the new year. Some features that were unique attractions when the legal framework was first proposed in early 2000 have been nullified by other markets' progress in the meantime - the amended German mortgage banking act, for example, allows the inclusion of assets from a wider range of countries in Pfandbrief covered pools.

Of all the new covered bond laws under preparation - others include Finland and Italy - this is the one likeliest to produce issuance within the next few months.

Fewer issuers will be there at the start than had once been expected. Rheinhyp had planned to drive the market but will now take a less active role since its incorporation in the new Eurohypo. But the Irish asset covered security (ACS), as it has been named, is still expected to develop well. Its rules for investor protection are the most stringent yet seen, with tight supervision, strict controls on assets eligible for cover pools and no possibility of risk from duration mismatching.

DePfa remains committed
DePfa's Wally Hoefer-Neder says her bank, which was closely involved with the design of the new law, remains committed to the market and will probably issue there early next year.

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