Publications

The European Covered Bond Council's (ECBC's) Fact Book, released in a new edition yearly, is the world's single greatest annual source of information, insight, and statistics on covered bonds.  It is also one of the world's great values—available free as a PDF download.

Although the focus is naturally on Europe, the book's coverage is broader, including strong technical articles on covered bonds in the U.S. and Canada.

The following was adapted from an announcement by DBRS:

In a commentary published Sept. 21, Canadian rating agency DBRS has provided a comprehensive review of the Canadian covered bond and residential mortgage markets.

Detailing the history and current status of the covered bond programs established by Canada's five largest banks, the commentary provides in-depth analysis of the residential mortgage market and the liquidity of residential mortgage loans in Canada.

If German Pfandbriefe (legislatively established covered bonds) are the "gold standard" for covered bonds, the Association of German Pfandbrief Banks (vdp) may be considered the bedrock of the Pfandbrief.  The vdp's 35 member institutions include many of Germany's best-known Pfandbrief issuers.

"Covered mortgage bonds have been used successfully in Europe for two centuries, but failed in the U.S. when introduced as farm mortgage debentures in the 1880s. Using firm-level data and a sample of loans made by one Kansas mortgage company, I find that debenture programs grew out of established loan brokerage operations and were used to fund mortgages that were difficult to broker because of size, term or risk characteristics.

This useful fourteen-page report from the Congressional Research Service was written by Edward V. Murphy, a specialist in financial economics.  Here is the table of contents:

Definitions

Policy Issues

"Skin in the Game" and Underwriting

Transparency and Investor Confidence

Capital Requirements and Lending Volume

Maturity Mismatch

The Association of Danish Mortgage Banks represents financial institutions subject to Danish legislation that "use sources of funding such as covered bonds (SDOs), covered mortgage bonds (SDROs) and mortgage bonds (ROs) to grant loans against mortgages on real property."

Canadian covered bonds are the topic of a reference article by John Mackle in Westlaw Business titled "Covered Bonds: Canadians Do Debt in Europe" (May 26). The article's premise is that with recent Canadian covered bond issues raising billions, "the legal nuances of the covered bond will soon be a topic for discussion in many boardrooms."

"From 1 April to 30 April 2010, the Eurosystem purchased eligible covered bonds with a total nominal value of €5,218 million under its covered bond purchase programme (CBPP). Of this total, €1,535 million was accounted for by purchases in the primary market and the remaining €3,683 million by purchases in the secondary market. The total nominal value of all covered bonds purchased by the Eurosystem since the programme was first started stood at €50,116 million on 30 April 2010."

When it comes to developing covered bonds as a funding tool, Canada is way ahead of the U.S., with a couple of multibillion dollar issuances aimed at American institutional investors already this year.  This one-pager from Canadian rating agency DBRS provides statistics to show how much Canada's Big Five banks have issued in total — and how much further their covered bond programs could go.

If you are looking for a concise, up-to-date introduction to covered bonds that is written in plain language and yet speaks with authority and touches all the bases, Moody's "A Short Guide to Covered Bonds" fills the bill admirably.

Chart showing Moody's-rated European covered bond programs, by country, at EOY 2009 (Source: Moody's Investors Service) CLICK IMAGE TO ENLARGEThe headings in this five-page guide provide both a sense of the subject areas addressed and the informal, lucid style: