The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Covered bonds and structured covered bonds: Rocked to its core?

The summer’s financial crisis has helped materialize in the markets a distinction between covered bonds and structured covered bonds that had been a matter of debate for some time. Philip Moore reports.

Mexico looks to fill funding gap with covered bonds


ALL COVERED BONDS are equal. But some are more equal than others. That message came through loud and clear not just from the suggestion at the height of this summer’s liquidity crisis that the market be subdivided into core and non-core sectors. That ill-advised and hastily withdrawn proposal, aired by ACI Germany, was shouted down amid a crescendo of opposition from existing or potential issuers that took exception to being branded as second-class citizens in the covered bond world. It was also plain enough from the performance of the covered bond market at a secondary and primary market level. "It is very obvious from the performance of spreads that there has been a considerable increase in differentiation in the covered bond universe," says Ted Packmohr, senior covered bond analyst at Dresdner Kleinwort in Frankfurt. "The clear winners, spread-wise, have been the German Pfandbriefe and the French obligations foncières, while the issuers that have suffered have been the US, UK and Spanish names."

A tiering process that had been visible in the secondary market in August, most notably in the case of Northern Rock, became equally conspicuous when the primary market hesitantly reopened in early September, giving a distinctly lukewarm welcome to UK issuers.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree