Regulation and ring-fencing is not always enough

Other buy-side institutions on Wednesday responded to M&G which earlier in the week argued that some covered bond collateral pools are impossible to analyse. Investors, spoken to by The Cover said that in principle they agree with M&G, but make the point that relative value also plays a key role — particularly in the case of Spain. Structure is also crucial. Bonds issued from the most traditionally revered structures that utilise specialist banks, such as Obligations Foncières, closely resemble RMBS — but without structural protection or transparency, they said.