Ratings need to catch up with covered bond reality
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Covered Bonds

Ratings need to catch up with covered bond reality

The explicit rating link between a covered bond and its issuer is becoming increasingly tenuous. The rating of a covered bond can never be entirely immune from its issuer. But the connection is now less material than it ever was. This is because Europe’s draft bank Recovery and Resolution Directive explicitly excludes covered bonds from a bank’s resolution process.

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