Covered frameworks using SPVs clearer and safer for bondholders, says Fitch

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By David Freitas
31 Jul 2020

Covered bond issuers using programmes containing a special purpose vehicle (SPV) have more guidance on the treatment of bad loans and protect bondholders further compared with those using integrated templates, Fitch said this week when assessing the risk coronavirus era mortgage payment holidays pose to the asset class.

Market participants are expecting covered bond pool quality to deteriorate as issuers’ credit losses rise due to the economic deterioration caused by the coronavirus pandemic.

Regulators from several countries have introduced mortgage payment holidays in order to help homeowners struggling to meet payment deadlines as a result of ...

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