The internationalisation of the covered bond market has been one of the major trends of the past few years. Investors routinely compare and buy bonds in different countries and issuers are becoming less reliant on domestic investors.
Until now, however, this dynamic development has bypassed the US. With no domestic covered bonds in existence only a few US investors have even taken the trouble to understand the product and, although a small number of European tranches have been sold in the US, it is a negligible investor base for the asset class.