The US Treasury and banking regulators yesterday sought to revive the private-sector US mortgage market by issuing guidelines on the development of a covered bond market.

Covered bonds are widely used by mortgage banks in Europe but are rare in the US. They are a form of secured bank debt that gives investors recourse to an issuing bank's balance sheet, as well as to a pool of collateral - usually high-quality mortgages or public-sector loans - if the bank is unable to repay its debt.