With Moodys highlighting the need for banks to issue
longer term debt and new rules meaning it will be harder to get
securitisations off balance sheet, there is an opportunity for
covered bonds to flourish. But investors will want new
legislation to guarantee their protection.
Yesterday, Moodys revealed that the average maturity
of newly issued rated debt in the US has fallen from 7.8 years
to 3.2 years over the last five years. The UK has seen a
similar trend and both systems will have to face more than $2
trillion of maturing debt before the end of 2012.
"If banks want to push out their average maturity, they will
have to issue new debt at much higher interest rates due to the
difficult climate and the longer maturities required,
said Jerry Marlatt, structured finance partner at Morrison
& Foerster and inaugural member of...