Although covered bonds and ABS are starting to be regarded as alternatives to one another, market experts said that these two markets could definitely co-exist. For one, these products have very different sets of buyers. The two also have varying liquidity and structural advantages and constraints.

Rick Watson, managing director of theAssociation for Financial Markets in Europe/European Securitization Forum,said that the covered bond and the securitization markets have two very distinct investor bases.

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