On This PageDecember, No. 257
This article explains covered bonds and their usefulness as an alternative to mortgage-backed securities for home financing.

What Are Covered Bonds?
Last Updated: 11/13/08
Covered bonds are debt instruments issued by banks and collateralized by specific pools of assets (home mortgages or, in the U.S., AAA-rated mortgage-backed securities, or MBSs). Much of the recent interest in covered bonds has arisen because some believe that they may be a new source of mortgage financing, providing banks with an alternative to the securitization of mortgages.