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A covered bond is a corporate bond with one important enhancement: recourse to a pool of assets that secures or "covers" the bond if the issuer (usually a financial institution) becomes insolvent.
The Pfandbrief (plural: Pfandbriefe), a mostly triple-A rated German bank debenture, has become the blueprint of many covered bond models in Europe and beyond. The Pfandbrief is collateralized by long-term assets such as property mortgages or public sector loans as stipulated in the Pfandbrief Act.
In U.S. Federal income tax law, a covered security is one for the sale of which the broker must report, to the Internal Revenue Service, the customer's basis and information on whether the sale results in a short-term or long-term gain or loss. This rule applies to certain types of securities, acquired after a specified effective date.
The covered bonds will also be secured by a pool of residential mortgage loans originated by MBL and eligible substitution assets, collectively referred to as the cover pool.Issuer: Macquarie Bank ...
Covered warrants: A covered warrant is a warrant that has some underlying backing, for example the issuer will purchase the stock beforehand or will use other instruments to cover the option. Basket warrants: As with a regular equity index, warrants can be classified at, for example, an industry level. Thus, it mirrors the performance of the ...
For example, in the 2008 Washington Mutual Bank seizure, all assets and most of Washington Mutual Bank's liabilities (including deposits, covered bonds, and other secured debt) were assumed by JPMorgan Chase. However other debt claims, including unsecured senior debt, were not. [2]
A bank lends money to a company, XYZ, and at the time of loan issues credit-linked notes bought by investors. The interest rate on the notes is determined by the credit risk of the company XYZ. The funds the bank raises by issuing notes to investors are invested in bonds with low probability of default. If company XYZ is solvent, the bank is ...
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