Instead of trading with a signifiant pick-up compared to the respective sovereign, covered bonds in a number of
countries represent the tightest product these days sometimes trading more than 100bp inside their respective
sovereign debt. Senior unsecured debt on the other hand widened to levels vs. covered bonds well in excess of
their pre-crisis levels only to come back to trade even inside covered bonds in some cases. And despite the introduction of the Bank Recovery and Resolution Directive (BRRD) the differences have yet to materially go wider.