Covered Bond Over-collaterisation

Covered Bond Over-collaterisation

To provide the level of protection for covered bonds demanded by investors, supervisors and rating agencies, you need more assets backing the bonds than there are bonds outstanding. In this video of the series, Richard discusses over-collateralisation: how to calculate it and how it is regulated.
Overview

Over-collateralisation is the most important piece of protection in covered bonds demanded by investors, supervisors and rating agencies. It essentially provides an extra safety margin in case of disruptions.

Key learning objectives:

  • Explain when OC is used and the different ways to calculate it

  • Describe the general requirements, and if inadequate, identify what extra OC can be used

  • Clarify if covered bonds from some countries are safer than others

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Summary
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Expert
Richard Kemmish

Richard Kemmish

Richard is a consultant working mainly in the covered bond market. He helps Finance Ministries and Central Banks in countries without covered bond laws to put legal frameworks in place. He has also helped the European Commission with their legislative agenda for covered bonds and related products.

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