Thursday 29 January 2026 - 15:00 (CET)

Resilient profitability, solid asset quality and capital buffers make for a balanced base case for European banks. Alongside stable expected collateral performance, most covered bond programmes can withstand issuer downgrades of up to three notches.

The cut in minimum Long-Term Funding Ratio (WFD) requirements from 40% to 20% recommended by Poland’s Financial Supervision Authority and the inclusion of capped retail deposits come alongside bold measures to strengthen the covered bond market.

Housing, the main collateral for covered bonds, contributes more than a third of Europe’s GHG emissions. Yet while climate change can significantly amplify credit risk in covered bonds, mitigation can add more credit risk than actual climate impacts.

Thursday, September 11th 2025 - 3:00 PM (CEST)

Higher mortgage rates have increased pressure on housing affordability. Longer fixed-rate mortgages periods limit the risk of shocks to the banking system and support the resilience of euro-area mortgage markets.

Europe’s real estate firms find funding respite but refinancing challenge looms; covered bonds provide stability in turbulent times; non-prime office segment faces rising vacancy rates; what can Frederick the Great tell us about today’s capital markets?

We are constructive on European covered bond ratings. European banks entered 2025 in solid shape, while a stable European economy will support rating levels. But investors will need to remain vigilant for risks that could catch the market off guard.

Homeowners in some European markets prefer floating-rate mortgages while others prefer longer-dated fixed interest rates. Given that borrowing costs are all linked to the same ECB rates, this is somewhat counter intuitive.

With sovereign credit quality reflecting fiscal and economic challenges, the Draghi report offered valuable insights into how to address some structural issues facing the euro area. But the report was notably silent on the contribution of covered bonds.