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FIGCovered Bonds

Low TLTRO take up bodes well for covered bonds

The lower than expected take up of the Targeted Long Term Refinancing Operation is positive for covered bond supply. It should also lead to an expansion in covered bond demand, as the rising probability of a sovereign quantitative easing (QE) programme and resulting sovereign rally improves relative value, especially for peripheral covered bonds. However, political uncertainty in Greece is causing peripheral spread widening.

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