‘Profit not demand’ drives covered CDS
A template for covered bond credit default swaps should be launched in the next few weeks, according to a person with knowledge of the initiative. Some syndicate bankers were sceptical of the need for added protection on covered bonds, given their dual recourse structure and inherent risk profile. Others, however, felt that with a paradigm shift in risk perception since the start of the financial crisis, the time could be right to offer buyers an extra layer of security on an increasingly important product.
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