"The European covered bond market is one of the most dynamic segments of the European capital market. As such it is one of the main driving forces behind the integration of European financial and mortgage markets" (European Covered Bond Fact Book, 2007). What is intriguing is that Belgian issuers have yet to embrace this market. Belgium has an open economy, and is at the heart of Europe. Could the lack of deals mean that Belgian legislation presents obstacles to Belgian credit institutions wishing to issue covered bonds?
No legal framework
Unlike most European countries, Belgium does not have a dedicated legal framework to ease the use of covered bonds by Belgian issuers. Most such frameworks provide for a local supervisory regime. Where necessary, they enable an appropriate legal mechanism to segregate the assets of the cover pool while on the balance sheet of the issuer from the other assets on its...