Papadogiannis Varouchakis, Thomas;
(2025)
A Legal and Regulatory Analysis of Covered Bonds and the European Covered Bond Market.
Doctoral thesis (Ph.D), UCL (University College London).
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Abstract
This thesis examines the EU covered bond regulatory framework and argues that the preferential regulatory treatment covered bonds receive, vis-à-vis comparable financial instruments like senior RMBS tranches, is unjustified, since it lacks a solid foundation. This conclusion is reached by examining, in Part I, the fundamental features of covered bonds, and showing that, despite some unique characteristics they possess, investing in covered bonds entails very significant risks for investors, which arise once the covered bond issuer has defaulted on its covered bonds obligations. Because of those risks, the position of covered bond investors is arguably more precarious than the position of senior RMBS investors. Using the crisis of 2007-12 as a case study, Part II of the thesis illustrates that the (theoretical) risks identified in Part I have not materialised, and therefore covered bonds remain an untested financial instrument to this day. That is because national and EU authorities have consistently intervened in the European covered bond market to prevent issuing credit institutions from defaulting on their covered bond obligations, and risks thereby materialising for covered bond investors. Despite the massive support they received, however, which often came at the expense of the European RMBS market, covered bonds’ performance during the 2007-12 crisis was not materially superior to the performance of senior RMBS tranches. They nonetheless occupy a privileged position in the EU regulatory framework crafted in the aftermath of the 2007-12 crisis, as shown in Part III of the thesis. By treating preferentially an untested financial instrument, whilst disregarding the considerable risks that arise for investors, the EU covered bond regulatory framework is unjustified. At the same time, by focussing exclusively on treating covered bonds preferentially, this framework disrupts the smooth operation of the European covered bond market, and results in covered bonds becoming a tool of regulatory policy.
| Type: | Thesis (Doctoral) |
|---|---|
| Qualification: | Ph.D |
| Title: | A Legal and Regulatory Analysis of Covered Bonds and the European Covered Bond Market |
| Language: | English |
| Additional information: | Copyright © The Author 2025. Original content in this thesis is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY-NC 4.0) Licence (https://creativecommons.org/licenses/by-nc/4.0/). Any third-party copyright material present remains the property of its respective owner(s) and is licensed under its existing terms. Access may initially be restricted at the author’s request. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of Laws |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10203026 |
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