Washington Mutual has launched a covered mortgage-backed bond in Europe, making the company the first US-based bank to complete such a transaction in the $1.7 trillion European covered bond market.
Covered bonds differ from traditional mortgage-backed securities in that the loans used to secure the obligations remain on Washington Mutual’s (WaMu) balance sheet, allowing the company to maintain control over the assets.
The covered bonds are issued by WM Covered Bond Program, a special-purpose entity which, in turn, purchases floating rate US dollar denominated mortgage bonds issued directly by Washington Mutual Bank.
Kerry Killinger, WaMu’s chairman and CEO, also said that the bank plans to be a regular issuer in this market so as to complement its US business.