engleski

Innovative structures of covered bonds: perspective in financing small-and medium-sized enterprises

Covered bonds, as innovative financial debt instruments, are already well accepted on developed European capital markets as a source of funds for housing financing. They are traditionally introduced and predominantly used in mortgage finance as a complementary source of funds to the most common funding source used by credit institutions, i.e. deposits, and for the purpose of mortgage lending. In addition to this, covered bonds can be used to finance other private and public activities. Covered bonds can, however, also be observed as alternative debt instruments intended for fund raising in contrast to the conventional, plain vanilla bonds – the senior unsecured debt, and to the off-balance securitisation structures – the asset backed securities. This paper analyses such securities in general, with the research focusing on innovative structures of covered bonds – European secured notes. This paper aims to both find and compare the potential of European secured notes to other similar securities in financing special purposes with the public interest, such as small- and medium-sized enterprises. Such enterprises, due to capital intensity and higher risk or lower profitability, have difficulties in attracting the interest of creditors because, in many cases, the only available external financing for them traditionally are loans offered by banks, whose financing is mostly based on traditional deposits. In that sense, and for the purpose of the research, credit institutions funding structure and loans to non-financial corporations, as well as the funding structure of small- and medium- sized enterprises, debt and issuance of covered bonds and securitisation structures are analysed and compared on the sample of euro area countries and by using methodology of descriptive statistics. The results of such an analysis may be a valuable source of information, used for better understanding of the importance of innovative capital markets instruments, as well as recognising the possibility of their inclusion in financing a wider spectrum of specific purposes.

overed bonds, securitisation, European secured notes, SMEs, financing

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