Jurisdiction(s):
United Kingdom

Key definition

Bond definition

What does Bond mean? A bond is a tradable debt security used to raise finance: the issuer borrows from investors and agrees to pay interest (a coupon) and to repay principal on a stated maturity date. Bonds may pay fixed, floating or index‑linked coupons, be zero‑coupon, and redeem at maturity or amortise over time. “Bond” is a descriptive market term rather than a single statutory definition, though bonds sit within the wider regulatory category of transferable securities. Documentation typically comprises a prospectus or offering memorandum and terms and conditions, often constituted by a trust deed with a bond trustee acting for bondholders. Key...

UK regulated covered bonds: legal and regulatory regime, structure, documentation, listing and capital treatment

Published by a LexisNexis Banking & Finance expert

Practice notes

What are covered Bonds?

Covered bonds are asset-backed Securities (ABS) with distinctive features:

Issuer – they are brought to market by banks or other Mortgage lenders
Collateral – they are secured against a pool of mortgages or public sector indebtedness (the asset pool)
Dynamic asset pool – the pool is maintained on a dynamic basis so that repaid or defaulted assets are replaced with new ones
Dual recourse – bondholders have claims on both the issuer and the asset pool
Statutory and regulatory regime – issuance takes place under a statutory and/or regulatory framework that ensures:
- the asset pool is segregated from the issuer’s other assets
- the pool is sufficient to cover repayment of the covered bonds
- bondholders enjoy a priority claim over the pool that is unaffected by the issuer’s default or insolvency

UK-regulated covered bonds regime

The UK legal and regulatory framework for covered bonds is set out in:

The Regulated Covered Bonds Regulations 2008, SI 2008/346, as amended by:
- The Regulated Covered Bonds (Amendment) Regulations 2008, SI 2008/1714
- The Regulated Covered Bonds (Amendment) Regulations 2011...

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Web page updated on 22/05/2026

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