As the evolving financial markets have focused attention on alternative means of financing assets in the capital markets, covered bonds may become a key technique available to those seeking financing for residential or commercial lending businesses.  A covered bond is a senior debt instrument that is recourse to the issuing bank, secured by a “cover pool” of high quality assets that is actively managed to meet performance and overcollateralization criteria and that is available to provide for continuing payments to bondholders if the issuer becomes insolvent.

Cadwalader's Covered Bonds practice serves global clients entering this space and advocates on behalf of removing regulatory impediments to the issuance of covered bonds by U.S. based financial institutions.  While Europe has seen the development of a more robust covered bond market, covered bonds backed by U.S. assets remains a developing area that demands the innovation and legal insight for which Cadwalader has long been known. In addition to advising major trade associations providing comments and insight to government regulators, our attorneys are advising a number of market participants regarding U.S. covered bond structures and regulation.