Covered bond investors have had a stellar year but are unlikely to match that performance in 2020. They will be relying upon healthy new issue premiums and a steady supply of higher yielding, non-standard deals to stand a chance of making good returns.
10 year Bund yields look set to finish the year around 70bp below where they started, and with covered bond spreads in the region of 15bp-20bp tighter against mid-swaps across the board, investors that follow the Markit iBoxx Euro Covered Total Return Index - EUR would have posted
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