Uncovering covered bonds: The impact of a reform on the Swedish mortgage bond market

Abstract: The thesis discusses the potential impact on the components of the cost of financing for Swedish mortgage institutes of new legislation giving them the opportunity to issue covered bonds, collateralized debt securities similar to the German pfandbrief. Arguments for both a lower cost of financing through such bonds and a higher cost for the remainder of the financing exist, as well as a potential for the reform to reduce the total financing cost. However, the spread between mortgage bonds about to be converted to covered bonds and similar government bonds has not been substantially impacted by the prospects of such a conversion.