Covered Bonds as a Source of Financing Residential Properties in Poland
Covered Bonds as a Source of Financing Residential Properties in Poland

Summary/Abstract: The relatively small equity of mortgage banks that has been created in Poland over the last twelve years does not allow the refinancing of housing real estate credits with the use of mortgage bonds. Nonetheless, there is more imminent threat of liquidity problems among the universal banks that have granted mortgage loans for financing housing real estate. Thus, one expects to see the emergence of a system of issuing bonds to improve the financial standing of those banks. The process of the development of mortgage banking raising funds on capital markets through the issue of bonds has already commenced in Poland. The paper presents the essence and the legal groundwork for that process, as well as the volume and the structure of bonds issue against the background of refinancing mortgage loans with bonds in the selected countries of the European Union. The paper includes a discussion of security principles, and presents the main issuers of bonds. Due to the attractiveness of that financial instrument, the discussion includes the presentation of the bond market in Poland, and its main investors. In conclusion, the Author presents prerequisites for the encouragement and acceleration of the type of financing which will also increase the credibility of that security on the financial market.

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