Mortgage-backed securities agency

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. 

Clearly, investors that seek to invest in bonds that sell in high denominations, such as certain mortgage-backed and agency bonds, or bonds that are too "complex" for individual investors, including convertibles, sovereigns, junk, and derivative securities, would be better off investing in these securities through mutual funds. 

But first, you should know what types of bonds are available. Among the types of bonds you can choose from are U.S. government securities, municipal bonds, corporate bonds, mortgage and asset-backed securities, federal agency securities and foreign government bonds. There are also many short-maturity options such as Treasury bills, bank certificates of deposit and commercial paper. 

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