Best practice undermines overvalued covereds

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Best practice undermines overvalued covereds

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CR54F6 Pocket calculator with lettering "short selling" on Dollar bills and an equity curve | Alamy Stock Photo

The European Commission’s best practice guidelines for the financial sector in handling the coronavirus crisis may challenge the safety mechanisms embedded in covered bonds, which have become fundamentally overvalued — especially in countries like Italy where payment holidays have been widely taken up — thereby instigating a sell recommendation from analysts at Barclays.

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