State backed bonds are not covered but ABS

Friday, June 29, 2012

Finnish prime minister, Jyrki Katainen, has suggested that Spain and Italy could use covered bonds backed by state assets or tax revenue to ease their funding needs. Covered bond analysts initially suggested the bonds would be issued through the respective banking sectors. But if the bonds are sold or auctioned directly by the sovereign, the covered bond label will not be applicable, they said.