Covered bonds and RMBS as secured funding instruments for the real estate market in the EU
Covered bonds and RMBS as secured funding instruments for the real estate market in the EU

Summary/Abstract: Implications of the financial downturn have shifted the focus of interest in market of the refinancing instruments from the RMBSs (Residential Mortgage Based Securities) to more secure and stable covered bonds. Securitization technique promises fewer chances for its application in times of turbulence. Moreover, punitive regulatory sanctions and tainted reputation have limited the issued volumes of RMBSs over the last few years. In contrast, covered bonds can better satisfy the needs of banks for a long-term funding due to its enhanced safety standards for investors, favorable regulation and tight spreads. German Pfandbriefe system serves as a benchmark in the covered bonds’ market.

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