TreatiseTreatise

Covered Bonds Handbook

 by James R. Tanenbaum, Anna T. Pinedo
 
 Copyright: 2010-2013
 Last Updated: June 2013

 Product Details >> 

Product Details

  • ISBN Number: 9781402412943
  • Page Count: 1414
  • Number of Volumes: 2
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With the possibility of new legislation coming that would create a statutory framework for covered bonds in the U.S., Covered Bonds Handbook arrives at an ideal time for you, as it:

  • Shows how covered bonds have been prominent financing tools in Europe for centuries.
  • Shows the many benefits of covered bonds, including potential advantages over securitization and comparative funding costs.
  • Explains how covered bond transactions are currently structured in the U.S., China, Europe, and Canada.
  • Provides a comparative analysis of the jurisdictional framework for covered bond issuances.
  • Details how foreign banks offer covered bonds into the United States
  • Discusses the proposed U.S. legislation that would codify the treatment of covered bonds.
  • Details the credit ratings methodologies of Moody’s, Fitch, and Standard & Poor’s with regard to covered bonds.
  • Examines how the FDIC’s Final Policy Statement and the Treasury Department’s Best Practices have helped to lay the groundwork for a U.S. covered bonds market.

Legislators, regulators, investors, banks, and the financial media all agree that covered bonds may be an important tool in the U.S. Be ready to take full advantage by reading the Covered Bonds Handbook.

Written by contributors from around the globe, and edited by leading authorities on sophisticated financing techniques from Morrison & Foerster LLP, Covered Bonds Handbook makes a clear and compelling case for these alternative funding instruments, showing you how covered bonds:

  • Offer issuers the opportunity to diversify their funding sources at competitive rates.
  • Give issuers additional operational flexibility.
  • Deliver the needed transparency that enables investors to assess relevant risks.
  • Feature a dual-recourse structure

Covered Bonds Handbook shows why the future is now for covered bonds. In 2010, foreign banks sold approximately $35 billion in U.S. dollar denominated covered bonds in the United States. Be ready to capitalize on the hottest opportunity in the financial markets. This practical new guide features appendices with rating agency studies and reports • the texts of FDIC Interim and Final Policy Statements and the Treasury Department’s Best Practices for Residential Covered Bonds • UK covered bonds reference materials • sample U.S. covered bonds documents.

  Preface
Chapter 1: An Introduction to Covered Bonds
  • § 1:1 : Why Focus on Housing Finance?1-2
  • § 1:2 : The Financial Crisis1-3
  • § 1:3 : The Housing Boom1-4
  • § 1:4 : Mortgage Originations Pre-Securitization1-6
    • § 1:4.1 : Generally1-6
    • § 1:4.2 : The GSEs1-7
    • § 1:4.3 : The FHLB System1-7
  • § 1:5 : Securitization1-8
    • § 1:5.1 : Generally1-8
    • § 1:5.2 : Innovation in the Securitization Market1-11
    • § 1:5.3 : REMIC Status and Mortgage Modifications1-13
    • § 1:5.4 : Accounting and Other Benefits1-13
  • § 1:6 : Covered Bonds1-14
    • § 1:6.1 : Generally1-14
    • § 1:6.2 : Benefits1-14
    • § 1:6.3 : Differences Between Covered Bonds and Securitization1-15
    • § 1:6.4 : The Covered Bond Market1-17
    • § 1:6.5 : Contractual or “Structured” Covered Bonds1-17
    • § 1:6.6 : Disadvantages Associated with Contractual Covered Bonds1-17
  • § 1:7 : Development of Covered Bonds in the United States1-18
    • § 1:7.1 : Generally1-18
    • § 1:7.2 : Regulatory Guidance in the United States Regarding Covered Bonds1-19
    • § 1:7.3 : FDIC Policy Statement1-20
    • § 1:7.4 : Treasury Best Practices1-22
    • § 1:7.5 : Test Case1-23
  • § 1:8 : Proposed Covered Bond Legislation1-24
    • § 1:8.1 : Generally1-24
    • § 1:8.2 : Effect of Legislation on U.S. Covered Bonds1-25
  • § 1:9 : Challenges for Securitization1-26
    • § 1:9.1 : Future of the GSEs1-26
    • § 1:9.2 : Other Regulatory and Accounting Developments1-28
  • § 1:10 : Conclusion1-29
Chapter 2: History of Covered Bonds Outside the United States Katsuhiko Fujihira ~ Morrison Foerster
Soo Jin Yoon ~ Kim & Chang
Atsushi Takahashi ~ Morrison & Foerster LLP
Jeremy Jennings Mares ~ Morrison & Foerster LLP
Wallburga Kullmann ~ Dewey & LeBoeuf LLP
Peter J. Green ~ Morrison & Foerster LLP
Aaron Palmer ~ Blake, Cassels & Graydon LLP
Tony Grundy ~ Morrison & Foerster LLP
Patrice Doat ~ Gide Loyrette Nouel
Fernando Navarro ~ Cuatrecasas
Kyu Sik Kim ~ Kim & Chang LLP
Yung Ho Kim ~ Kim & Chang LLP
Hoin Lee ~ Kim & Chang LLP
Jaime de la Torre ~ Cuatrecasas
  • § 2:1 : Germany2-5
    • § 2:1.1 : Origins2-5
    • § 2:1.2 : Jumbo Pfandbriefe2-6
    • § 2:1.3 : Pfandbrief Act of 20052-7
      • [A] : Generally2-7
      • [B] : Reform Act and Further Amendments to the Pfandbrief Act of 20052-8
  • § 2:2 : Rest of Europe2-10
    • § 2:2.1 : France2-10
      • [A] : Development2-10
      • [B] : Forms of Covered Bonds2-11
      • [C] : Obligations Fonciéres (ObF)2-12
        • [C][1] : Issuer2-12
        • [C][2] : Eligible Cover Pool2-13
        • [C][3] : Collateralization Requirements2-13
        • [C][4] : Post-Insolvency Investor Protections2-13
      • [D] : Obligations de financement de l’habitat (OFH) (former structured covered bonds)2-14
        • [D][1] : Issuer2-14
        • [D][2] : Eligible Cover Pool2-15
        • [D][3] : Collateralization Requirements2-15
        • [D][4] : Post-Insolvency Investor Protections2-16
    • § 2:2.2 : Spain2-16
      • [A] : Legislation2-16
        • [A][1] : Previous Legislation2-16
        • [A][2] : Current Legislation2-17
      • [B] : Types of Covered Bonds2-17
        • [B][1] : Mortgage Covered Bonds2-17
          • [B][1][a] : Issuer2-17
          • [B][1][b] : Legal Requirements2-18
          • [B][1][c] : CHs2-18
          • [B][1][d] : BHs2-19
          • [B][1][e] : Issuance Limits2-19
          • [B][1][f] : Special Preference and Insolvency of the Issuer2-20
        • [B][2] : Public-Sector Covered Bonds2-20
      • [C] : Documentation2-21
        • [C][1] : Issuance2-21
        • [C][2] : Listing2-22
      • [D] : Covered Bonds and Securitization—Main Differences2-22
    • § 2:2.3 : United Kingdom2-22
      • [A] : Pre-Legislation2-22
        • [A][1] : Historically2-22
        • [A][2] : Contractual Framework2-23
      • [B] : Post-Legislation2-24
        • [B][1] : Generally2-24
        • [B][2] : Article 52(4) Compliance2-25
        • [B][3] : Implementing Regulations2-26
        • [B][4] : 2008 Amendments to the UK Regulations2-28
        • [B][5] : 2011 Amendments to the UK Regulations2-28
      • [C] : Conclusion2-31
  • § 2:3 : Canada2-31
    • § 2:3.1 : Origins2-31
    • § 2:3.2 : Development2-32
      • [A] : Large Financial Institutions2-32
      • [B] : Small Financial Institutions2-33
      • [C] : Contractual Framework2-33
  • § 2:4 : Asia2-34
    • § 2:4.1 : Korea2-34
      • [A] : Development2-34
      • [B] : Securitization Techniques2-34
      • [C] : Kookmin Bank Covered Bonds Issuance2-35
        • [C][1] : Generally2-35
        • [C][2] : Structure2-36
        • [C][3] : Significant Characteristics2-37
          • [C][3][a] : Generally2-37
          • [C][3][b] : Utilizing the Trust Structure—Bankruptcy Remoteness of the Trust2-37
          • [C][3][c] : Utilizing the ABS Act2-38
            • [C][3][c][i] : Abbreviated Process for Perfection2-38
            • [C][3][c][ii] : Exemption from Mortgage Transfer Registration Requirement2-39
            • [C][3][c][iii] : Crystallization of Kun-Mortgage2-39
        • [C][4] : Major Legal Issues2-39
          • [C][4][a] : Avoidance and Fraudulent Conveyance Risk in Light of Overcollateralization Level2-39
          • [C][4][b] : Set-Off Risk2-40
          • [C][4][c] : Withholding Tax2-41
          • [C][4][d] : Negative Pledge Issue2-41
        • [C][5] : Major Commercial Features2-42
          • [C][5][a] : Asset Coverage Test2-42
          • [C][5][b] : Amortization Test2-42
          • [C][5][c] : Revolving Suspension Events2-42
      • [D] : KHFC Covered Bonds Issuance2-43
        • [D][1] : Generally2-43
        • [D][2] : Structure2-44
        • [D][3] : Mortgage Loans2-45
        • [D][4] : KHFC Act and Other Korean Legal Issues2-45
          • [D][4][a] : Statutory Priority Right of Payment2-45
          • [D][4][b] : Rights of Investors Under KHFC Act2-45
          • [D][4][c] : Perfection2-46
          • [D][4][d] : Avoidance and Fraudulent Conveyance Risk of Swap Novation2-46
      • [E] : Moving Forward2-47
    • § 2:4.2 : Japan2-48
      • [A] : Background2-48
      • [B] : Shinsei Bank: Almost, But Not Quite2-49
        • [B][1] : Background2-49
        • [B][2] : Basic Structure2-49
        • [B][3] : Shinsei Bonds and “Typical” Structured Covered Bonds—Differences2-50
      • [C] : Certain Legal Issues2-51
        • [C][1] : No Intercompany Loan Between the Issuer and the Guarantor; Payments of Principal and Interest Made by the Guarantor Not the Issuer2-51
        • [C][2] : No Security Over the Obligation of the Guarantor2-51
        • [C][3] : Nature of the Asset Pool2-52
        • [C][4] : Need for Covered Bonds Legislation?2-52
        • [C][5] : Comparison of the Shinsei Bank Structure and Securitization2-53
Chapter 3: Covered Bond Case Study--Germany Wallburga Kullmann ~ Dewey & LeBoeuf LLP
  • § 3:1 : Overview3-2
  • § 3:2 : Legislation3-3
    • § 3:2.1 : Special Public Supervision, License to Issue Pfandbriefe3-3
      • [A] : Generally3-3
      • [B] : Granting of Licenses3-3
      • [C] : Permanent Supervision and Cover Audits3-4
      • [D] : Cover Pool Monitors3-5
    • § 3:2.2 : Insolvency Remoteness of Pfandbriefe3-6
      • [A] : Segregation of the Cover Assets3-6
      • [B] : Cover Pool Administrator3-7
    • § 3:2.3 : Cover Principle3-9
      • [A] : Generally3-9
      • [B] : Cover Assets for Mortgage Pfandbriefe3-9
      • [C] : Cover Assets for Public Pfandbriefe3-12
      • [D] : Cover Assets for Ship Pfandbriefe3-13
      • [E] : Cover Assets for Aircraft Pfandbriefe3-14
      • [F] : Additional Other Assets for All Types of Pfandbriefe3-14
    • § 3:2.4 : Cover Register3-16
    • § 3:2.5 : Matching Cover3-16
      • [A] : Generally3-16
      • [B] : Nominal Value Cover3-16
      • [C] : Net Present Value Cover3-16
    • § 3:2.6 : Risk Management3-19
    • § 3:2.7 : Transparency of the Cover Pools3-19
    • § 3:2.8 : Risk Weighting of Pfandbriefe3-20
      • [A] : Solvency Regime3-20
      • [B] : Large Exposures Regime3-22
    • § 3:2.9 : Repo Discount3-23
  • § 3:3 : Structure3-23
    • § 3:3.1 : Registered Versus Bearer Pfandbriefe3-23
    • § 3:3.2 : Documentation3-24
      • [A] : Prospectus3-24
      • [B] : Subscription Agreement3-26
      • [C] : Confirmation Certificate by Cover Pool Monitor3-27
      • [D] : Fiscal Agency Agreement3-27
      • [E] : Global Note and Terms and Conditions3-27
    • § 3:3.3 : Parties3-28
    • § 3:3.4 : Listing3-28
    • § 3:3.5 : Issuance of Jumbo Pfandbriefe3-29
      • [A] : Minimum Standards3-29
        • [A][1] : Minimum Issue Size3-29
        • [A][2] : Format3-29
        • [A][3] : Stock Market Listing3-29
        • [A][4] : Market Making3-29
        • [A][5] : Add-Ons3-30
        • [A][6] : Transfer and Buyback3-30
        • [A][7] : Loss of Status3-31
      • [B] : Recommendations3-31
    • § 3:3.6 : Other Issues3-31
      • [A] : Competition from State Guaranteed Bonds3-31
      • [B] : Investor Base3-32
Chapter 4: Covered Bond Case Study--United Kingdom Jeremy Jennings Mares ~ Morrison & Foerster LLP
Peter J. Green ~ Morrison & Foerster LLP
  • § 4:1 : Covered Bond Structure4-2
    • § 4:1.1 : Transaction Structure4-2
    • § 4:1.2 : Regulated Covered Bonds Versus Unregulated Covered Bonds4-3
    • § 4:1.3 : Issue Proceeds/Intercompany Loan4-5
    • § 4:1.4 : Guarantee/Security Over Asset Pool4-5
    • § 4:1.5 : Liability of the Issuer and the Guarantor4-5
    • § 4:1.6 : Interest Rate and Currency Exchange Hedging4-6
    • § 4:1.7 : Cashflows—Unregulated and Regulated Covered Bonds4-7
    • § 4:1.8 : Ownership Structure of the Guarantor4-8
    • § 4:1.9 : Asset Coverage Test4-10
    • § 4:1.10 : Amortization Test4-10
    • § 4:1.11 : Issuer Events of Default and Guarantor Events of Default4-10
      • [A] : Issuer Events of Default4-10
      • [B] : Guarantor Events of Default4-11
  • § 4:2 : Issuance Structure4-12
    • § 4:2.1 : Guarantee or No Guarantee4-12
    • § 4:2.2 : Continuous Issuance Program4-13
  • § 4:3 : Parties4-14
    • § 4:3.1 : Issuer4-14
    • § 4:3.2 : Seller(s)4-15
    • § 4:3.3 : Guarantor4-15
    • § 4:3.4 : Bond Trustee4-15
    • § 4:3.5 : Security Trustee4-16
    • § 4:3.6 : Swap Providers4-16
    • § 4:3.7 : Servicer4-17
    • § 4:3.8 : Asset Monitor4-17
    • § 4:3.9 : Principal Paying Agent/Paying Agent4-17
    • § 4:3.10 : Arranger4-17
    • § 4:3.11 : Dealers4-18
    • § 4:3.12 : Guaranteed Investment Contract Provider4-18
    • § 4:3.13 : Other Parties4-18
  • § 4:4 : Documentation4-19
    • § 4:4.1 : Mortgage Sale Agreement4-19
    • § 4:4.2 : Servicing Agreement4-21
    • § 4:4.3 : Intercompany Loan Agreement4-21
    • § 4:4.4 : Guarantee of the Covered Bonds4-22
    • § 4:4.5 : Asset Monitor Agreement4-22
    • § 4:4.6 : Swap Agreements4-22
    • § 4:4.7 : Program Agreement4-23
    • § 4:4.8 : Trust Deed4-24
    • § 4:4.9 : Deed of Charge4-24
    • § 4:4.10 : Agency Agreement4-25
    • § 4:4.11 : Cash Management Agreement4-25
    • § 4:4.12 : Account Agreement4-25
    • § 4:4.13 : Guaranteed Investment Contract4-25
    • § 4:4.14 : Corporate Services Agreement4-26
    • § 4:4.15 : Legal Opinions4-26
  • § 4:5 : Listing4-27
    • § 4:5.1 : Generally4-27
    • § 4:5.2 : Prospectus Directive and Prospectus Regulation4-27
  • § 4:6 : Legal Issues4-29
    • § 4:6.1 : Insolvency4-29
    • § 4:6.2 : Fraudulent Transfers4-31
    • § 4:6.3 : Set-Off Issues4-32
    • § 4:6.4 : Consumer Credit Act of 19744-33
    • § 4:6.5 : Unfair Terms in Consumer Contracts Regulations of 1994 and 19994-34
Chapter 5: Covered Bond Case Study--Canada Aaron Palmer ~ Blake, Cassels & Graydon LLP
  • § 5:1 : Development of Canadian Covered Bond Programs5-2
  • § 5:2 : Framework for Canadian Covered Bond Programs5-7
    • § 5:2.1 : Transaction Structure5-7
    • § 5:2.2 : Issue Proceeds and the Intercompany Loan5-10
    • § 5:2.3 : Guarantee and Grant of Security Over the Cover Pool5-11
    • § 5:2.4 : Composition of the Cover Pool5-12
    • § 5:2.5 : Liability of the Issuer and the Guarantor5-13
    • § 5:2.6 : Interest Rate and Currency Exchange Hedging5-14
    • § 5:2.7 : Ownership Structure of the Guarantor5-14
    • § 5:2.8 : Asset Coverage Test5-15
    • § 5:2.9 : Amortization Test5-15
    • § 5:2.10 : Pre-Maturity Test5-16
    • § 5:2.11 : Issuer Events of Default5-16
    • § 5:2.12 : Guarantor Events of Default5-17
    • § 5:2.13 : Terms of the Intercompany Loan Agreement5-18
  • § 5:3 : Parties5-19
    • § 5:3.1 : Issuer5-19
    • § 5:3.2 : Guarantor5-20
    • § 5:3.3 : Bond Trustee5-20
    • § 5:3.4 : Swap Providers5-20
    • § 5:3.5 : Asset Monitor5-21
    • § 5:3.6 : Principal Paying Agent/Paying Agent5-21
    • § 5:3.7 : Arranger5-21
    • § 5:3.8 : Dealers5-21
    • § 5:3.9 : Guaranteed Investment Contract Providers5-22
  • § 5:4 : Prospectus and Listing Requirements5-22
  • § 5:5 : Program Documentation5-24
  • § 5:6 : Resilience of Covered Bonds Programs Following the Financial Crisis5-25
  • § 5:7 : Comparative Housing Finance Models5-27
Chapter 6: Non-U.S. Covered Bonds Market Giles Parker ~ UBS Investment Bank
  • § 6:1 : Overall Trends6-2
    • § 6:1.1 : Changes to Bank Funding Strategies6-2
    • § 6:1.2 : Liquidity As a Fundamental Driver for Covered Bonds6-4
    • § 6:1.3 : Investor Confidence As an Important Factor to Bolster Financial Markets6-5
    • § 6:1.4 : Basel III and Covered Bonds6-6
  • § 6:2 : Market Trends6-7
    • § 6:2.1 : Generally6-7
    • § 6:2.2 : Covered Bond Market Growth6-8
      • [A] : Increase in Issuances6-8
      • [B] : Increase in Issuing Entities6-11
    • § 6:2.3 : Covered Bond Performance6-11
  • § 6:3 : Structural Trends6-14
    • § 6:3.1 : Maturities6-14
    • § 6:3.2 : Rates6-17
    • § 6:3.3 : Deal Size6-17
    • § 6:3.4 : Issuers6-18
    • § 6:3.5 : Ratings6-20
    • § 6:3.6 : Market Making6-23
  • § 6:4 : Trends by Country6-25
    • § 6:4.1 : Germany6-25
    • § 6:4.2 : France6-26
    • § 6:4.3 : Luxembourg6-27
    • § 6:4.4 : Spain6-30
    • § 6:4.5 : Rest of Europe6-31
    • § 6:4.6 : United Kingdom6-32
    • § 6:4.7 : Canada6-34
      • [A] : Generally6-34
      • [B] : Stable Housing Market6-34
Chapter 7: Covered Bond Ratings Yehudah Forster ~ Moodys Investors Service
Helene Heberlein ~ Fitch Ratings
Alla Sirotic ~ Fitch Ratings
  • § 7:1 : Importance of Ratings for Issuers and Investors7-3
    • § 7:1.1 : Generally7-3
    • § 7:1.2 : Leading Agencies’ Approach to Ratings7-4
      • [A] : Convergence of Methodologies7-4
      • [B] : Differences in Methodologies7-4
        • [B][1] : Moody’s7-4
        • [B][2] : Fitch7-5
        • [B][3] : S&P7-5
      • [C] : Ratings Analysis During the Financial Crisis7-6
  • § 7:2 : Moody’s—Rating Covered Bonds7-7
    • § 7:2.1 : Framework7-7
      • [A] : Generally7-7
      • [B] : Expected Loss7-7
      • [C] : Timely Payment Indicator (TPI)7-8
    • § 7:2.2 : Main Drivers of the Rating7-9
      • [A] : Strength of the Sponsor Bank7-10
      • [B] : Credit Quality of the Cover Pool7-10
      • [C] : Refinancing Risk7-11
      • [D] : Market (Interest Rate and Currency) Risk7-12
    • § 7:2.3 : Issues for U.S. Covered Bonds7-13
      • [A] : Generally7-13
      • [B] : Scenarios Following a Sponsor Bank Default7-14
      • [C] : Exposure to Exacerbated Refinancing Risk—Rating Implications7-16
    • § 7:2.4 : Rating Process7-18
  • § 7:3 : Fitch—Rating Covered Bonds7-19
    • § 7:3.1 : Background7-19
    • § 7:3.2 : Summary of Rating Criteria7-19
    • § 7:3.3 : Setting the D-Factor7-20
    • § 7:3.4 : The March 14, 2011 Counterparty Criteria7-21
    • § 7:3.5 : Example of a Covered Bonds Rating7-22
      • [A] : Step 1—Determining the Maximum Achievable Rating on a PD Basis7-22
      • [B] : Step 2—Stress-Testing Overcollateralization to Set the Covered Bond PD Rating7-24
      • [C] : Step 3—Calculating the Recovery Uplift7-25
    • § 7:3.6 : Current U.S. Covered Bond Program Features7-26
  • § 7:4 : S&P—Rating Covered Bonds7-28
    • § 7:4.1 : Background7-28
    • § 7:4.2 : Historic Analytical Framework7-28
      • [A] : Legal Framework7-29
      • [B] : Asset Quality of the Cover Pool7-29
      • [C] : Cashflow Analysis7-30
      • [D] : Overcollateralization7-30
    • § 7:4.3 : Changes to Ratings Methodology7-30
      • [A] : The 2009 Asset-Liability Mismatch (ALMM) Criteria7-31
        • [A][1] : Generally7-31
        • [A][2] : Basic Concepts7-32
          • [A][2][a] : Step 1: Calculation and Classification of the ALMM7-33
          • [A][2][b] : Step 2: Program Categorization7-34
          • [A][2][c] : Step 3: The Maximum Potential Covered Bond Rating7-34
          • [A][2][d] : Step 4: Cash Flow and Market Value Analysis7-34
          • [A][2][e] : Step 5: The Covered Bond Rating7-35
      • [B] : The 2010 Counterparty Criteria7-35
        • [B][1] : Generally7-35
        • [B][2] : Basic Concepts7-36
          • [B][2][a] : Types of Counterparty Risk7-36
          • [B][2][b] : Replacement Framework7-36
      • [C] : Proposed Covered Bonds Counterparty Criteria7-37
        • [C][1] : Generally7-37
        • [C][2] : Basic Concepts7-37
          • [C][2][a] : Step 1: Differentiating by the Number of Derivative Counterparties7-38
          • [C][2][b] : Step 2: Calculating the Weighted-Average Rating on Derivative Counterparties7-39
          • [C][2][c] : Step 3: Determining the Adjustment to the Maximum Potential Covered Bond Rating by Reference to the ICR of the Covered Bond Issuer7-39
        • [C][3] : Comments on the Proposed Counterparty Criteria7-40
Chapter 8: Alternative Funding Sources Dr. Thomas Schopflocher ~ NERA Economic Consulting
Dr. Jordan Milev ~ NERA Economic Consulting
Paul Hinton ~ NERA Economic Consulting
  • § 8:1 : Reasons for Issuers to Consider Covered Bonds8-3
    • § 8:1.1 : Generally8-3
    • § 8:1.2 : Issuer Advantages8-5
      • [A] : Generally8-5
      • [B] : Competitiveness Versus FHLB Advances8-6
      • [C] : Diversification8-9
      • [D] : Longer Maturity Financing8-10
      • [E] : Operational Flexibility8-11
      • [F] : Overcollateralization8-11
    • § 8:1.3 : Issuer Disadvantages8-12
      • [A] : Capital Relief8-12
      • [B] : Prepayment, Default, and Interest Rate Risk8-13
      • [C] : Consequences of Default8-15
      • [D] : Regulatory Risk8-16
      • [E] : Counterparty Risk on Swaps8-17
      • [F] : Issuance Limit8-18
    • § 8:1.4 : Investor Advantages8-20
      • [A] : Generally8-20
      • [B] : Dual Recourse Structure8-20
      • [C] : High Credit Quality8-21
      • [D] : Lack of Prepayment Risk8-23
      • [E] : Attractive Yield8-24
      • [F] : Liquidity8-26
    • § 8:1.5 : Investor Disadvantages8-29
      • [A] : Generally8-29
      • [B] : Lack of Legislative Framework8-29
      • [C] : Decline in Appetite for U.S. Financial Sector Exposure8-30
  • § 8:2 : Historic Funding Model for U.S. Mortgage Loans (Housing Finance)8-31
    • § 8:2.1 : Development of GSEs8-31
    • § 8:2.2 : FHLB8-33
      • [A] : Generally8-33
      • [B] : History8-33
      • [C] : Ownership Structure8-34
        • [C][1] : Generally8-34
        • [C][2] : Dividends8-35
      • [D] : Financing8-35
      • [E] : Advances8-36
    • § 8:2.3 : GSE and Private Securitization8-36
      • [A] : Early Days of MBS8-36
      • [B] : CMOs8-37
      • [C] : Structuring Non-Agency MBS8-38
      • [D] : Credit Enhancement8-38
      • [E] : Subprime Market8-39
    • § 8:2.4 : Growth of the Securitization Market8-39
      • [A] : Growth of the Agency and Non-Agency Markets8-39
      • [B] : Factors Driving the Growth of Mortgage Securitization8-41
  • § 8:3 : Securitization Compared to Covered Bonds8-41
    • § 8:3.1 : Recourse and Credit Enhancement8-41
    • § 8:3.2 : Prepayment Risk8-43
    • § 8:3.3 : Accounting8-43
    • § 8:3.4 : Liquidity8-44
    • § 8:3.5 : Ratings8-47
    • § 8:3.6 : Assets8-47
    • § 8:3.7 : Investors8-47
  • § 8:4 : FHLB Advances Compared to Covered Bonds8-48
    • § 8:4.1 : Assets/Collateral8-48
    • § 8:4.2 : Recourse8-49
    • § 8:4.3 : Member Credit Limits8-50
    • § 8:4.4 : Term Structure8-50
    • § 8:4.5 : Potential for Regulatory Reform8-51
    • § 8:4.6 : Funding Cost8-53
  • § 8:5 : Prospects for Covered Bonds in the Post Financial Crisis Economy8-53
Chapter 9: History and Development of Covered Bonds in the United States
  • § 9:1 : Overview9-2
  • § 9:2 : Background on Receivership9-4
  • § 9:3 : Guidance from the FDIC9-7
    • § 9:3.1 : Generally9-7
    • § 9:3.2 : Interim Final Policy Statement9-8
      • [A] : Scope9-8
      • [B] : Issues9-9
      • [C] : Comments9-10
        • [C][1] : Generally9-10
        • [C][2] : Clarify the Receivership Process9-11
        • [C][3] : Confirm that the FDIC Will Pay Damages in the Case of Repudiation9-12
        • [C][4] : Abolish the 4% Cap on Total Covered Bond Liabilities9-13
        • [C][5] : Relax the Strictures on Permitted Collateral9-14
        • [C][6] : Other Recommendations9-16
    • § 9:3.3 : Final Policy Statement9-17
      • [A] : Generally9-17
      • [B] : Scope9-17
      • [C] : Issues9-18
  • § 9:4 : Treasury Best Practices9-20
    • § 9:4.1 : Intent9-20
    • § 9:4.2 : Scope9-21
      • [A] : Cover Pool9-21
      • [B] : Payments9-22
      • [C] : Disclosure9-23
      • [D] : Defaults9-23
      • [E] : Other Details9-24
      • [F] : Conclusion9-24
Chapter 10: U.S. Covered Bond Case Study and Regulatory Framework Kenneth E. Kohler ~ Morrison & Foerster LLP
  • § 10:1 : Pre-FDIC and Treasury Guidance10-2
    • § 10:1.1 : Case Study: Washington Mutual and Bank of America Covered Bond Programs10-2
    • § 10:1.2 : How WaMu Covered Bond Holders Fared10-5
    • § 10:1.3 : Rating Experience of U.S. Covered Bonds10-5
  • § 10:2 : Post-FDIC and Treasury Guidance10-6
    • § 10:2.1 : Structural Options10-6
      • [A] : Single-Tier10-6
      • [B] : Two-Tier10-10
    • § 10:2.2 : Payment Flows of U.S. Covered Bonds10-11
      • [A] : Generally10-11
      • [B] : Two-Tier10-11
        • [B][1] : Generally10-11
        • [B][2] : Overview of Payment Flows10-12
        • [B][3] : Payment Flows—Mortgage Bond Issuer Rating Downgrade10-13
        • [B][4] : Payment Flows—Mortgage Bond Acceleration10-14
        • [B][5] : Payment Flows—Covered Bond Acceleration10-14
      • [C] : Single-Tier10-15
  • § 10:3 : Regulatory Framework10-16
    • § 10:3.1 : Generally10-16
    • § 10:3.2 : SEC Registration and Exemptions10-16
      • [A] : Generally10-16
      • [B] : SEC Registration Requirements10-17
      • [C] : Offering-Related Exemptions10-21
        • [C][1] : Rule 144A10-21
        • [C][2] : Regulation S10-21
        • [C][3] : Section 4(2) and Regulation D10-22
      • [D] : Issuer Related Exemptions10-23
        • [D][1] : Section 3(a)(2)10-23
        • [D][2] : Section 3(a)(5)10-24
        • [D][3] : Benefits of a Securities Act Issuer Exemption10-25
      • [E] : Banking Agency Offering Document Filing and Review Requirements10-26
        • [E][1] : Generally10-26
        • [E][2] : OCC Registration Statement Requirement and Exemptions10-27
        • [E][3] : OTS Offering Circular Requirements and Exemptions10-30
    • § 10:3.3 : Investment Company Act of 194010-31
      • [A] : Generally10-31
      • [B] : Single-Tier Exemptions10-33
      • [C] : Two-Tier Exemptions10-35
        • [C][1] : Generally10-35
        • [C][2] : Rule 3a-710-36
        • [C][3] : Section 3(c)(5)(C)10-37
        • [C][4] : Builder Bond Exemption10-38
        • [C][5] : Sections 3(c)(5)(A) and 3(c)(5)(B)—Non-Mortgage Collateral10-40
        • [C][6] : SEC Exemptive Orders10-41
    • § 10:3.4 : Trust Indenture Act of 193910-42
    • § 10:3.5 : Security Interest Perfection and Foreclosure Issues10-43
Chapter 11: Documentation of U.S. Covered Bonds Jerry R. Marlatt ~ Morrison & Foerster LLP
  • § 11:1 : Overview of Existing U.S. Covered Bond Structures11-2
    • § 11:1.1 : Two-Tier Structure11-2
    • § 11:1.2 : Unusual Features11-3
    • § 11:1.3 : Documentation11-4
  • § 11:2 : Program Documentation11-5
    • § 11:2.1 : Generally11-5
    • § 11:2.2 : Prospectus11-6
      • [A] : Generally11-6
      • [B] : Noteworthy Prospectus Sections11-8
        • [B][1] : Terms and Conditions of the Covered Bonds11-8
        • [B][2] : Final Terms and Drawdown Prospectuses11-9
        • [B][3] : Subscription and Sale11-9
        • [B][4] : Transfer Restrictions11-9
    • § 11:2.3 : Mortgage Bond Indenture11-10
      • [A] : Generally11-10
      • [B] : Asset Coverage Test11-10
      • [C] : Events of Default11-11
    • § 11:2.4 : Delaware Series Trust11-12
    • § 11:2.5 : Covered Bond Indenture11-14
      • [A] : Generally11-14
      • [B] : Terms and Conditions11-15
      • [C] : Cashflow Distributions11-16
        • [C][1] : Prior to Mortgage Bond and Covered Bond Accelerations11-16
        • [C][2] : After Mortgage Bond Acceleration and Prior to Covered Bond Acceleration11-16
        • [C][3] : After Covered Bond Acceleration11-18
      • [D] : Events of Default11-19
    • § 11:2.6 : Asset Monitor Agreement11-20
    • § 11:2.7 : Program Agreement11-21
  • § 11:3 : Issuance Documentation11-21
    • § 11:3.1 : Final Terms11-21
    • § 11:3.2 : Mortgage Bond Indenture Series Supplement11-22
    • § 11:3.3 : Mortgage Bond Purchase Agreement11-22
    • § 11:3.4 : Series Trust Supplement11-23
    • § 11:3.5 : Covered Bond Indenture Series Supplement11-23
    • § 11:3.6 : Covered Bond Swap Agreement11-23
    • § 11:3.7 : Investment Agreement11-25
    • § 11:3.8 : Subscription Agreement11-26
Chapter 12: Appendices A1-A16: Selected Rating Agency Studies and Reports
Chapter 13: Appendices B1-B3
Chapter 14: Appendices C1-C7
Chapter 15: Appendices D1-D6
Chapter 16: Appendix E: The German Pfandbrief Act Translation
Chapter 17: Table of Authorities
Chapter 18: Index to Covered Bonds Handbook

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