Today, the rule is that if the value of the property declines, and the covered bond loan then exceeds 80 per cent of the property value, the issuing mortgage-credit institute has to find additional collateral for the mortgage. I see little likelihood that it will be possible to requirement. And I doubt that it would benefit Danish mortgage credit in the longer run.
We should not introduce the slightest doubt about the quality of Danish covered bonds. The legislation on covered bonds has provided the banks with the possibility of allowing investors in covered bonds to be secured creditors in respect of a number of assets in the banks’ balance sheets. This arrangement makes covered bonds a much safer asset than senior debt issued by a bank.