Discovering covered bonds - the market, the challenges, and the Reserve Bank’s response

Release date
Vol. 76. No. 2. June 2013
Annalise Vucetich; Amber Wadsworth
Covered bonds are corporate bonds that are backed by a pool of high-quality assets originated by the issuer. Popular in Europe for around 300 years, they are a relatively new source of funding for New Zealand banks. This article provides some background on covered bonds and the international covered bond market. It then looks at the benefits and the policy challenges arising from banks’ issuance of covered bonds, and the Reserve Bank’s response to the development of the New Zealand covered bond market.