How secure is uncommitted OC?

The Dutch Intervention Act, which grants wide-ranging powers to transfer assets to a third party, does not seem to have perturbed investors of SNS Bank’s covered bonds, which have performed 40bp since its nationalisation. Investors’ confidence may be based on the Dutch covered bond and contract laws. However, neither gives clear guidance on the uncommitted portion of collateral in the covered bond pool – of which there is plenty in the case of SNS Bank.