What are covered bonds?

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Grudun answered a question in Real Estate.
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Grudun answered one year ago …

Covered bonds are bonds issued by a bank. The bonds are covered by a group of mortgages that are held by the bank ON THE BANK'S BALANCE SHEET. They are also guaranteed by the bank like any other bond. The reason these are being considered is that it keeps the bank responsible for making quality mortgage loans and gets more capital into the mortgage market(these were the primary mortgage funding method in Europe).

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