Moody’s Investors Service believes that the covered bond legislation unanimously approved by the House Financial Services Committee on July 28 will help covered bond buysiders by setting up investor-friendly procedures following an issuer default. 

However, there is also a downside because the structure requires overcollaterilzation levels that will not address market value risk. The development of this market can also lead to different standards for different types of issuers, the credit rating agency said.

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