RMBS more liquid than covered bonds

Covered bonds have been less liquid than RMBS this year, new analysis by Bank of America Merrill Lynch shows.The controversial finding underscores the impression that European RMBS should become eligible for inclusion in Basel III’s Liquidity Coverage Ratio. The case for RMBS inclusion is further underscored by the fact that banks have few funding options, as the senior unsecured market remains practically closed just as heavy government guaranteed redemptions fall due next year.