Covered Bonds

Our knowledge of bank regulatory issues, financial institutions and financing techniques makes us the first call for covered bond issuances by market participants.

Covered bonds are debt instruments that have recourse either to the issuing entity or to an affiliated group to which the issuing entity belongs, or both, and, upon an issuer default also have recourse to a pool of collateral, called the cover pool, separate from the issuer's other assets. The cover pool consists of high quality assets, including residential-mortgage backed securities, public debt or ship mortgages. Typically, covered bondholders have a privileged or preferential claim (embodied in statute, in Europe) against the cover pool in the event of the issuer's insolvency. By contrast, in a securitization, an investor only has recourse to the special purpose entity that issues the securities and to that issuer's assets, which include the asset pool and its cash flows. From the issuer's perspective, covered bonds remain on the issuer's balance sheet, whereas securitized assets are off balance sheet. Covered bonds are issued by depositary institutions that are regulated entities subject to supervision by domestic banking authorities, which ensures that regulators would step in if a safety and soundness issue were to arise.

We have been involved in nearly $100 billion of covered bond offerings. We draw on our covered bond experience in New York and London and the unique experience of our Washington, D.C. office in dealing with the U.S. Securities and Exchange Commission, the Department of Labor, OCC, Federal Reserve and FDIC on regulatory matters critical to covered bonds. We have been actively involved in advising European issuers on U.S. dollar issuances. We have also been an active participant in the development of U.S. covered bond legislation, including discussions with the U.S. Treasury, FDIC, legislators and Capitol Hill staff.

Read more about covered bonds:

• Covered Bonds Handbook

News Alerts

• Relief for Covered Bonds as ESMA refines the Clearing Obligation
• Comment Letter: The Development Of A Responsible Private Label Securities Market
• Volcker Rule and Covered Bonds
• Liquidity Coverage Ratio Impact on Covered Bonds
• Bright Outlook for Covered Bonds
• SEC Registration of Covered Bonds
• SEC Registered Covered Bonds
• Covered Bonds: 2011 – The Senate
• Covered Bonds: 2011 – The House II
• Covered Bonds: 2011 – The House
• Review of UK Covered Bond Framework
• Senate Committee Hearing on Covered Bonds
• Covered Bond Legislation Passed by the House Financial Services Committee
• Covered Bond Legislation: Is the Fourth Time the Charm?
• Hearing on Covered Bond Legislation
• U.S. Covered Bond Legislation Introduced in Congress
• An Update on Covered Bonds
• Update on the FSA’s Approach to Covered Bond Issuance and Asset Encumbrance
• Treasury Announces Best Practices for Covered Bonds
• The FDIC Offers Certainty on Covered Bonds – a step in the right direction
• Something to Talk About
• Covered Bonds and U.S. Regulators

Articles

• Seizing the opportunity by Jerry Marlatt and Anna Pinedo
  First published in International Financial Law Review July/August 2014.
• An analysis of covered bonds and the US market by Jerry Marlatt, Jeremy Jennings-Mares and Peter Green.
  © This article was first published in the Capital Markets multi-jurisdictional guide 2015/16 and is reproduced with the permission of the publisher, Thomson Reuters.
• Time for a U.S. Alternative by Jerry Marlatt and Anna Pinedo
  First published in International Financial Law Review July/August 2013.
• A Battle over Collateral by Jerry Marlatt
  First published in International Financial Law Review March 2013.
• Still Waiting on a US Covered Bond Statute by Jerry Marlatt
  First published in Euromoney Debt Capital Markets Handbook 2013.
• Coming to America by Anna Pinedo and Jerry Marlatt
  First published in International Financial Law Review July/August 2012.
• Security Blanket: Secured Debt Gains Appeal by Jerry Marlatt and Anna Pinedo
  © 2012 Financier Worldwide Limited. Permission to use this reprint has been granted by the publisher.
• "Papers, Please" by Jerry R. Marlatt
  Reprinted with permission. view additional articles at www.coveredbondreport.com.
• Where are US Covered Bonds? by Jerry R. Marlatt
  Reprinted with permission.
• Covered Bonds Staged to Become Alternatives or Complements to Securitization by Anna Pinedo and James R. Tanenbaum
  Reprinted with permission.
• The US Dollar Covered Bonds Roundtable Jerry Marlatt quoted
  First published in EuroWeek September 2010.
  Reprinted with permission.
• US Covered Bonds: Looking to Europe by Jerry Marlatt
  First published in International Financial Law Review June 2010.
  Reprinted with permission.
• Covered Bonds in the US by Anna Pinedo
  Copyright © 2010 Practical Law Publishing Limited and Practical Law Company, Inc. All Rights Reserved.
• A Separate Piece by Anna Pinedo and James Tanenbaum
  First published in Total Securitization October 21, 2008.
  Used by permission.
• Finance: Covering Your Assets by Peter Green and Jeremy Jennings-Mares
  First published in Legal Week September 18, 2008.
  Used by permission.
• The Not So New Thing - Covered Bonds by Anna Pinedo
  First published in Wall Street Lawyer September 2008.
  Used by permission.
• U.S. Covered Bonds: Coming Soon to a Financial Institution Near You by Anna Pinedo and James Tanenbaum
  First published in Euromoney Global Banking & Financial Policy Review September 2008.
  Used by permission.
• Bridging the Gap: Regulatory Moves in the U.K. and U.S. Seek to Close the Gap with Europe on Covered Bonds by Peter Green and Jeremy Jennings-Mares
  First published in Institutional Investor News: The 2008 Global Securitization Guide.
  Used by permission.
• Expanding the US Covered Bonds Market Anna Pinedo quoted
  First published in Financier Worldwide June 2008.
  Used by permission.
• Creating a Level Playing Field – A Covered Bond Framework for the UK by Peter Green and Jeremy Jennings-Mares
  First published in Financier Worldwide March 2008.
  Used by permission.
• Amidst the Turmoil, Covered Bonds Bounce Back by Anna Pinedo and James Tanenbaum
  First published in Asset Securitization Report November 2007.
  Used by permission.
• Lucrative Knock-Offs: Covered Bonds in the U.S. by Anna Pinedo and James Tanenbaum
  First published in Euromoney Global Banking & Financial Policy Review 2007.
  Used by permission.

U.S. Legislation and Resources

• Current Senate legislation
• Current House legislation
• Treasury Best Practices
• Final FDIC Statement
• FDIC Interim Policy Statement
• Bloomberg Law Podcast: Covered Bonds
  (click to listen to the podcast)
• Frequently Asked Questions about Covered Bonds 

UK Legislation and Resources

• The Regulated Covered Bonds Regulations 2008
  (SI 2008/346)
• FSA Regulated Covered Bonds Sourcebook
  (part of the FSA Handbook)
• FSA factsheet on the UK Regulated Covered Bonds regime
• FSA Regulated Covered Bonds Register
• Application for registration and other relevant forms for Regulated Covered Bonds
• FSA's 23rd October 2008 Letter to the BBA on Covered Bond Issuance and Asset Encumbrance

Download Considerations for Foreign Banks Financing in the US (2014).

See also Recent Attorney Publications for additional articles.

Client Stories - We're Only as Good as Our Last Deal

Read more about what we've been up to lately (documents in pdf format):

Capital Markets

• PIPE Transactions—Problem. Creativity. Solution.
• Hedging PIPEs—No Need to Call the Plumber, Martha. That's a Derivative Embedded in the PIPE
• Registered Directs—A Public PIPE
• Dribbling It Out—Equity Distribution Programs
• Open IPO—Auction Distribution Methodologies
• Incapital—Bonds Made Simple
• BASICS—What's in a Name
• Passave—The Cash-Only Line
• An Organic Makeover—Protalix
• Call It What You Will—Pre-Marketed or Wall-Crossed: The New Offering of Choice
• Time and Time Again—An Innovative Use of an ATM
• Specially Purposeful—Helping a Special Purpose Acquisition Company Finance
• Lonely at the Top (of the World)—Restructuring and Recapitalizing Icelandic Banks
• Showdown in the American West—Main Street vs. Wall Street
• Acquisition Well Planned—The Acquisition of Morgan Keegan
• Bought and Sold—A Bought Deal
• Up, Up and Away—The Up-C IPO
• Driven—Mobileye’s Private Equity Financing
• Good to be Green—First Corporate Issued Green Bond
• Arctic Full Circle—Islandsbanki
• Back to the Future—Mobileye IPO
• An (Ice)land-mark Transaction—LBI Resolution Proceedings
• Stabilizing a House of Cards—Residential Capital

Derivatives and Structured Products

• Your First Time?—Issuing an Exchange Traded Note
• Betting on Oneself—Issuer Equity Derivative Transactions
• UBS—Tailor-Made
• Monetizations—Cashing In Without Cashing Out
• Happy Meals—144A Converts
• Deferred Compensation—Immediate Solution
• Derivatives on Steroids (Notionally)—Leveraged Total Return Swaps
• "Intelligent Design"—Evolutionary Changes in Equity Derivatives
• Weakness of Power—Collateralized Hedging Programs for the Energy Market
• Hedging Hedge Funds—Financing Hedge Funds
• Fast Forward—A Forward Sale
• Credit Where Credit is Due—Structured Products with Embedded Credit Default Features
• A Matter of "Principal"—Structured Products with Principal Protection
• Who's Got the Power?—Energy Commodity Linked Structures and Energy Transactions
• Jack of All Trades—Master of Structured Products
• The Odd Couple—Structured Products and Life Insurance
• Holy BOLI!—Diversified and Principal-Protected
• Power to the People—MLPs
• Mind the Gap—The Equity Gap
• The Dividend Link—Dividend Returns in a Structured Note
• Researching an Answer—Research-Based Structured Notes
• Making an Impact, Literally—NPX

Structured Finance and Insurance-Linked Products

• Lucrative Knock-off—Covered Bonds in the U.S.
• Northern Lights—Canadian Covered Bond Issuers
• Not Exactly Born in the USA—U.S. Registered Covered Bonds
• Catastrophe Bonds and Side Cars—Whose Risk is it Anyway?
• Life Settlements and Premium Finance
• Life Insurance Securitizations and Structured Products—Where Morality Risk Meets the Capital Markets
• Monolines—Ambac, FGIC and PMI
• Restarting the Mortgage Markets—Linking Community Lenders to the Capital Markets
• The New Gold Standard—BMO Vaulted Gold Bullion Trust

Hybrids

• The Elusive D Basket—Hitting the Trifecta
• Hybrids: A Case Study—Saving Tax Dollars Makes CENts
• Hybrids: A Case Study—Hitting it out of the Park: Bank of America Corporation HITS
• Synthetic Equity—It's the Real Thing
• Hybrids in Japan—Softbank Corp.