Europe's covered-bond market, kick-started by the European Central Bank, is taking off, with issuance this year soaring past the 2008 total. The situation is raising the question of whether issuance in Europe can help revive the covered-bond market in the U.S. "Covered bonds could become very popular in the U.S. as they offer banks cheaper financing than other instruments and offer investors a very safe product at a time when many are still cautious," said Tim Skeet, head of covered-bond origination at Bank of America Merrill Lynch.

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