Never before have different jurisdictions had such divergent experiences in the covered bond market. Since the start of the year and the European Central Bank’s Long Term Refinancing Operations, spreads in core Europe have moved ever tighter. German levels have reached sub-Euribor territory with peripheral paper trading hundreds of basis points wider after hitting record highs. Meanwhile, countries outside the eurozone have enjoyed comparative stability and experienced the same spread performance as core Europe, without suffering from the same lack of liquidity.
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