Parts I - II

Vlad PELIGRAD, Assistant Professor, Covered bonds as a resource for the real estate market
Covered bonds are one of the few long term funding instruments still available on the market, despite the financial crisis, demonstrating their resistance in a difficult environment and remaining one of the cheapest wholesale funding resources for banks. The other well known and used financial instrument – the securitization – proved its limits during the financial crisis because it was exposed to the risk of underperformance of the cover pool.

The robustness and stability of the covered bonds are given, among others, by the specific legal framework offered by each country where they are issued, the quality of the cover assets, the segregation of assets and bankruptcy remoteness and the recourse against the issuing bank.

Romania has enacted covered bond legislation since 2006, but no issuance of such bonds took place on the market. Taking in consideration the shortage of long term resources available on the market and the continue need of refinancing of the real estate boom from the last several years, issuing covered bonds might represent a solution for the Romanian banks.
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