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. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

It depends what you mean by covered bond

Net jumbo Pfandbrief issuance is likely be down again this year for the third year running, while structured covered bond issuance grows apace. This is generating some bitter debate about just how much investors understand the difference between the two types of debt. Louise Bowman reports.

How rating agencies see it ISSUERS THAT OPT for a structured covered bond in a jurisdiction where covered bond legislation exists are always going to ruffle feathers. This year alone banks in both Germany and France – the bedrocks of the covered bond market – have decided to spurn the traditional legislated option and issue deals outside the specific law. Landesbank Berlin in Germany and BNP Paribas have both established structured covered bond programmes in countries with legislation and in the latter case Crédit Mutuel quickly followed suit. These issuers have attracted some pretty pointed criticism from market purists. Traditional players have been at pains to point out publicly the perceived shortcomings of structured covered bonds and insist that this new section of a very old market is inferior to the established product. "Investors are not fully aware of the risks associated with structured covered bonds," claims one industry veteran. "There is not total transparency."

The point of contention seems to be that for structured covered bonds there is no specific legislation stating that the cover pools are bankruptcy-remote if there is an insolvency. No surprise there – that is the nature of the beast.

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.


Unlimited access to and

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


Unlimited access to and, 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


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