Covered bond

Financial instrument of low investment risk

 
 

What is a covered bond?

A covered bond is an instrument having been present in the Polish capital market since the year 2000. It is a debt security originated solely by mortgage banks, which is issued on the basis of and secured by the bank’s debt claims due to the loans granted by the bank, entered into the register of covered bonds’ collaterals.

 

Two types of covered bonds may be distinguished:

  • mortgage covered bonds which are issued (secured) on the basis of debt claims due to mortgage-backed loans,
  • public sector covered bonds which are issued (secured) on the basis of debt claims due to loans granted to the public sector or having sureties of entities from that sector