Covered bonds and securitisations have a wide array of similarities. For example, they both utilise residential mortgages as their principle asset for covered bond collateralisation. However, they are also very different in terms of their structure, regulatory treatment and uses.
Key learning objectives:
Identify similarities
Outline the differences in structure, performance, uses, asset eligibility and regulatory treatment
Explain why securitisations require less over-collateralisation
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