Washington Mutual is preparing to price the first covered bond program by a U.S. issuer. While the transaction is not structured as a genuine securitization and is being marketed overseas, it is eventually expected to have implications on the way that the Seattle-based thrift - as well as other peer companies - finances its operations.

The Washington Mutual Covered Bond Program will allow the Seattle-based bank to float about 20 billion ($25.6 billion) of senior debt secured by a portfolio of mortgage bonds. Those bonds are collateralized by 5/1 hybrid ARM home loans. ABN Amro, Barclays Capital and Deutsche Bank are acting as lead managers on the transaction, which is expected to price by Sept. 18.

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