Covered bonds

Topic Guides

The covered bonds market is evolving as more jurisdictions introduce legislation to establish a regulated market for this type of dual-recourse debt security.

This Topic Guide provides information on the covered bonds market and relevant legislation in various regions and jurisdictions.

Inside this Topic Guide

Topic overview

Covered bonds are a kind of hybrid, or dual-recourse security. They allow de-linking of the rating of the securities from the rating of the issuer because they are backed or "covered" by recourse to a pool of assets set aside to guarantee the obligations under the bonds, but unlike a normal securitisation the issuer is a real operating entity against which there is unlimited recourse.

This topic guide provides information on relevant legislation and the covered bonds market in each of the jurisdictions listed as well as some general non-jurisdiction specific material in the key resources section. The covered bonds market is evolving as more jurisdictions introduce legislation to establish a regulated covered bonds market. These regulated regimes establish certain benefits for issuers of compliant covered bonds.

Latest developments

(18 December 2019) Directive (EU) 2019/2162 on the issue of covered bonds and covered bond public supervision and amending the EU UCITS IV Directive and the EU Bank Recovery and Resolution Directive (BRRD) and Regulation (EU) 2019/2160 amending the Capital Requirements Regulation (CRR) as regards exposures in the form of covered bonds have been published in the Official Journal.

The Directive and Regulation entered into force on 7 January 2020 and applied from 8 July 2022.