Once upon a time, banks issued unsecured debt to eager investors as an easy method of funding themselves. Then the financial crisis struck and unsecured debt became an often unobtainable luxury. In today’s world, banks issue secured debt whereby they pledge a proportion of their assets as collateral for new debt issues.

Covered bonds have long been considered the safest type of secured debt, offering the highest level of protection to investors in the event of an issuer's default. But the flipside is that banks must ensure the bond is secured upon a dynamic pool of loans, typically mortgages that are ringfenced for the investor and are often over-collateralised.