Rising house will benefit holders of Germany covered bonds than covered bonds issued in other European countries, Moody’s Investors Service said today.

That’s because Germany’s Pfandbrief Act places conservative restrictions on mortgages that are eligible to back the covered bonds. “When house prices increase, the eligible amount of each cover pool asset remains generally constant,” Moody’s said. “A more valuable property backing the same loan amount provides a greater buffer against losses in the event of the borrower’s default.”

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