When RMBS are safer than covered bonds

Covered bonds and RMBS share important similarities which both the European Central Bank and Bank of England acknowledged last year in a discussion paper. As the two asset classes evolve, their vastly different regulatory treatment should become more difficult to justify. A comparison of Rabobank’s Storm 2015-1 RMBS, originated by its Obvion subsidiary, to a forthcoming conditional pass through covered bond to be issued by Van Lanschot Bankiers shows that regulation remains a more important determinant of price than fundamental credit risk.