## The Use of Mortgage Covered Bonds

_IMF Working Papers, January 1, 2007_

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**Canonical URL:** [The Use of Mortgage Covered Bonds](https://www.imf.org/en/publications/wp/issues/2016/12/31/the-use-of-mortgage-covered-bonds-20172)

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## Bibliographic details
- Authors: Renzo G Avesani, Elina Ribakova
- Published: January 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451865844.001

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### Summary
- Authors: Renzo G Avesani, Elina Ribakova
- Date: January 1, 2007
- Core observation: Rapid mortgage credit growth in mature and emerging countries has raised stability concerns.
- Primary focus: Examination of the two largest "jumbo" covered bond markets, Germany and Spain.
- Principal argument: Movements in covered bond prices can be used to analyze the credit developments of the underlying issuer and the quality of its mortgage portfolio.
- Additional inference: Mortgage covered bonds could be of interest to other mature and emerging markets facing similar risks related to mortgage credit.

### Findings and Analysis
- Market dynamics:
  - Many European credit institutions in mature markets have reacted to rapid mortgage credit growth by increasing securitization, particularly via mortgage covered bonds.
- Issuer perspective:
  - Covered bonds have become an attractive funding source and a tool for asset–liability management.
- Investor perspective:
  - Covered bonds enjoy a favorable risk-return profile and a very liquid market.
- Analytical use:
  - Movements in covered bond prices can serve as indicators of:
    - Credit developments of the underlying issuer.
    - Quality of the issuer's mortgage portfolio.
- Geographic focus:
  - Detailed examination of Germany and Spain as the two largest "jumbo" covered bond markets.
- Suggested applicability:
  - Mortgage covered bonds may be relevant for other mature and emerging markets with similar mortgage-credit risks.

### Policy Implications and Recommendations
- For issuers:
  - Consider mortgage covered bonds as a funding and asset–liability management tool where appropriate.
- For supervisors and policymakers:
  - Monitor covered bond price movements as market-based indicators of issuer creditworthiness and mortgage-portfolio quality.
- For emerging markets:
  - Assess the potential role of mortgage covered bonds in addressing elevated mortgage-credit growth and associated stability concerns.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-use-of-mortgage-covered-bonds-20172_