Covered Bonds

In this interactive course, participants will gain in-depth knowledge of the covered bonds market, its strategic role in bank funding, and the legal and regulatory frameworks that govern it. Through real-world examples and practical exercises, you’ll build a complete understanding of how covered bonds work — from structure to risk.

📌 Introduction to Covered Bonds
• The role of covered bonds in the bank financing toolkit
• Overview of the international covered bonds market
• What are covered bonds and how do they differ from RMBS?

📌 Key Players & Market Dynamics
• Overview of involved parties
• Covered Bonds vs. RMBS: differences and similarities
• Credit ratings and overcollateralization
• Timely payment mechanics and investor security
• Bail-in risk and asset encumbrance
• Transparency, reporting, and harmonization initiatives
• The Covered Bond Label and its significance

📌 Legal & Regulatory Framework
• Legal conditions for covered bonds
• Case study: SNS Investor Report
• Overview of Dutch covered bonds legislation
• Structured vs. regulated covered bonds
• Asset encumbrance and maintaining healthy balance sheet ratios

📌 Risk Management in Covered Bonds
• Liquidity buffers and overcollateralization strategies
• Stress testing and rating triggers
• Treatment of covered bonds under:
• UCITS and CRD
• LCR regulations
• ECB collateral eligibility

📌 ECB Involvement & Support
• The ECB and its role in supporting covered bonds
• Central bank purchase programs: CBPP1, CBPP2, CBPP3

📌 Transaction & Legal Structure
• Covered bonds transaction structure explained
• Comparison of international structures and types
• Eligible asset portfolios: criteria and selection
• Legal setup, including parallel debt structures
• Responsibilities of various parties
• Risks: settlement, commingling, and issuer insolvency
• Waterfall structure in the event of default

📌 Derivatives & Hedging in Covered Bonds
• The use of derivatives in covered bond programs
• Asset swaps and liability swaps explained

📌 Portfolio Testing & Monitoring
• Key portfolio tests and their importance:
• Asset Cover Test
• Amortization Test
• Prematurity Test
• The critical role of the asset pool monitor

📌 Rating Agency Methodologies
• How rating agencies assess covered bonds:
• Standard & Poor’s methodology
• Fitch methodology
• Moody’s methodology
• Key differences between rating approaches

This program is ideal for professionals in treasury, risk management, capital markets, legal, compliance, and structured finance, offering both strategic insight and practical tools to navigate and leverage the covered bonds market.