Is this the year of the covered bond?

THE YEAR OF THE COVERED BOND

M&G's Matthew Russell explains the impact a propendernace of covered bonds could have on debt holders.

We have been musing for a while now the impact of new financial regulations on bank funding and how banks will structure their balance sheets going forward. I speculated a couple of months ago that banks would likely begin to fund themselves by issuing a combination of covered bonds and contingent capital. My sense is that the demand for contingent convertible capital in the market is currently pretty weak, which if I am to be believed, leaves covered bonds as the only option for bank funding. Yesterday I think we got a glimpse into the future. Several European banks came to the ma...