Covered bonds market

The German Pfandbrief and Enrepean Covered Bonds Market... 

This chapter describes the German mortgage-bonds or Pfandbriefe market, its institutions, and working practice. We also consider other aspects of the European covered bond market. The instruments themselves are essentially plain vanilla bonds, and while they can be analysed in similar ways to US agency bonds and mortgage-backed bonds, there are also key differences between them, which we highlight in this chapter. Mortgage-backed securities are described in Chapter 11. 

As more European countries aim to establish their own covered bond markets with updated legislation, investors are getting a larger choice of Pfandbrief-like products. Most of the laws are based on the established German framework and aim to provide the same high quality of asset, but slight differences still remain. Here we look at the differences between the main runners in the covered bond arena. 

EXHIBIT7.7 European Covered Bond Market as of 24 January 2003... 

The Irish covered market is the most recent in Europe. When Ireland sought to create their covered bond market, they looked at all the relevant laws already in place throughout Europe, and cherry-picked the most attractive factors from an investor s perspective. What made this initiative even more impressive was the fact that Ireland has no history in issuing mortgage bonds. 

The legislation changes throughout the European covered bond markets, also bring another possibility a step closer—a European Pfandbrief. 

Like other covered bonds, their initial existence dates back many years previous, in the case of Spain s offering, to 1869. A considerable number of cedulas have been issued in the domestic retail market since that time. 

This new Irish product provides an interesting enhancement to the range of high quality products available in this sector. The legal framework combines all the traditional elements of covered bonds from existing European markets with innovative augmentations that serve to strengthen credit quality further. 

For longer-dated debt instruments investors have the a choice of the very long-term notional 30-year, 6% coupon Euro-Buxl contract which covers cash market bonds with a matnrity of between 20 and 30.5 years, or the notional 10-year, 6% coupon Enro-Bnnd contract which covers the 8.5-10.5 years maturity section of the yield curve. The nominal size for each contract is 100,000 both have a minimum allowable price movement (tick) of 1 basis point, which is valued at 10, and a contract cycle of March, Jnne, September, and December, of which the three nearest-to-delivery, snccessive contracts will be available for trading. 

Part One, Introduction to Bonds, covers bond mathematics, including pricing and yield analytics. This includes modified duration and convexity. Chapters also cover the concept of spot (zero-coupon) and forward rates, and the rates implied by market bond prices and yields yield-curve fitting techniques an account of spline fitting using regression techniques and an introductory discussion of term structure models. 

Carded thermally bonded technology is losing significant share in the cover stock market in North America and spun-bonded non-wovens accounted for 75 % of cover stock in 1999 (Fig. 10-7). In contrast widely different technologies are utilized to produce non-wovens for wipes. Hydro-entangled products are expected to grow due to superior strength and softness [7]. 

Fig. 10-7 Spun-bonded products dominate the cover stock market in North America due to better performance and lower cost. Hydro-entangled products are expected to grow in wipes.

ETAD has compiled a list of azo dyes which upon reduction of the azo bond would form the aromatic amines listed in Table 8.4. The list covers more than 500 azo dyes, of which at least 142 are still available on the world market [37],... 

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