Covered bonds provide a secure investment option for bondholders because they are backed by specific assets, which means if the issuer defaults, the bondholders have a claim on the underlying assets. This provides added security compared to unsecured bonds. Covered bonds are widely used in Europe and are an important tool for financing the housing sector, as the underlying pool of assets typically consists of mortgages. For issuers, covered bonds are an attractive financing method because they offer access to lower borrowing costs, thanks to the added security they provide to investors.