The concept of covered bonds has existed for about 200 years. This instrument was initiated by Frederick the Great of Prussia (Germany), with the creation of “Pfandbriefe.” The underlying idea was to help project financing. Typically, a bank issuing pfandbriefe bonds would be able to collateralize the bonds with some underlying assets already on its balance sheet.
In simple terms, a covered bond is a financial product whose creditors are benefiting from a pledge. This pledge usually corresponds to mortgage or public sector loans that are on the balance sheet of the issuing bank.
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Posted in Finance, Investment
In the residential mortgagebacked securities (RMBS) sector. In a second stage, we focus on the more advanced modeling techniques that have emerged among the most active market participants.
From an historical perspective, the structured finance market began with the issuance of the first mortgage-backed security in the U.S. by the Government National Mortgage Association (Ginnie Mae) in 1968. Soon after, the Federal Home Loan Mortgage Corporation (Freddie Mac) introduced its mortgage participation certificates in 1970, and, by 1977, the Federal National Mortgage Association (Fannie Mae) was in the game.
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Posted in Finance, Loan