A full recourse right creates an unrestricted unconditional obligation on the credit institution to repay a debt. Generally, default on a full recourse obligation leads to the insolvency of the obligor, and the creditor will have a claim on the general insolvency estate of the obligor on an equal basis with the other general creditors of the obligor. In most covered bond structures, the bond is issued by a credit institution, giving investors direct full recourse to the credit institution’s full resources. In some structures, however, the covered bond is issued by a special purpose entity (SPE), which on-lends the proceeds to a credit institution (whether by making a loan or buying a bond). This provides bondholders with full recourse to the underlying credit institution, albeit indirectly, through the SPE. For investors subject to the BCD, only covered bonds issued directly by a credit institution qualify for preferential risk weightings. Full recourse to a credit institution is a key difference between securitization and covered bonds. In securitizations, bondholders’ only recourse is to the cashflows from a securitized portfolio of assets. The credit institution which originated the assets typically does not guarantee the performance of the securitization. Therefore, if the cashflows from the securitized portfolio are insufficient to make payments on the securitization units when expected, holders of the units would generally have no claim against the credit institution which originated the securitized assets.