Government guarantee schemes force covered bond market to retrench

Covered bonds, both public and private, still have a place in portfolios despite competition from the recent phenomenon of government-guaranteed bank debt

In the face of keenly priced supply from banks issuing under government guarantee schemes, the public covered bond market was in dire straits in recent months. So adverse were conditions that there was no benchmark issuance between the collapse of Lehman Brothers and market-reopening deals last month, from Credit Agricole and BNP Paribas.

But participants in the market say that rumours of its demise have been exaggerated, pointing to the private market, which continued to do business in the