Sakthi
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07:21:18 am on July 23, 2008 | # |
Covered bonds are securities issued by a bank and backed by a dedicated group of loans known as a “cover pool”. There are two different types of covered bonds: those backed by high-quality mortgage loans and those backed by public sector loans. If the issuing bank becomes insolvent, the assets in the cover pool are separated from the issuer’s other assets solely for the benefit of the covered bondholders. Asset eligibility for the cover pool and the process in the event of an issuer insolvency are determined by laws specific to each country.
–PIMCO
