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FIGCovered Bonds

Is a commitment to triple-A really worth it?

Bayerische Landesbank’s decision to commit to a specific overcollateralisation for its two covered bond programmes to maintain triple-A ratings has sent a strong signal to investors that it is committed to keeping its quasi-agency status. But, in today’s regulatory environment the top rating is not economically justified, least of all in Germany where technical factors have compressed the credit curve.

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