It would be difficult to talk about European securitization without discussing the rise of the covered bond structure. The HBOS covered bond program best represents the development of this new asset class. As an alternative to traditional securitization, the covered bond addresses the need - especially under the pending Basle II - for issuers to tap a broader investor base. HBOS is the parent company of Halifax Plc, and is the largest mortgage originator in the U.K.

Although players admit that, in terms of structural innovation, the features were less than exciting - as it was modeled after a straightforward Pfandbriefe-type structure - it provided the U.K. mortgage lending industry a tool for expansion.

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