Covered bonds are dual recourse and backed by a dynamic collateral pool that ensures their highest quality at all times. In contrast RMBS are backed by a static pool, and because the instrument is non-recourse, the issuer in extreme circumstances would probably not be allowed to support the deal. For these and other reasons, the regulatory treatment of Van Lanschot’s conditional pass through (CPT) covered bond is justified as it is a safer instrument than Rabobank’s RMBS, says covered bond consultant Richard Kemmish in response to an opinion piece published by The Cover suggesting the oppposite.
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