or prematurely paid debt must be replaced in the pool, success of the product for the issuer depends on the institution's ability to maintain the credit quality of the cover pool by replacing the non-performing and repaid assets in the pool. Redemption regimes There are three major redemption regimes for covered bonds: Hard-bullet covered bonds: payments have to be made when due according to the original schedule. Failure to pay on the Standard Maturity Date (SMD) triggers default of the covered bonds, and the covered bonds accelerate. Until a few years ago, hard bullet structures were regarded as market practice. This means that if the respective covered bond issuer is not able to comply with their outstanding payment obligations, investors will obtain access to the respective covered bond programme's cover pool. If redemption of an issue is pending and the liquid funds available are not sufficient to redeem the bond and liquidity cannot be generated by another means, the collateral in the pool will be sold if the bond has a hard bullet structure. This means that investors can expect prompt repayment on the one hand but this is associated on the other hand with refinancing risk or market value risk - the risk that the market values of the assets may be reduced and, in extreme circumstances, the full repayment amount is not covered by the sales proceeds. Soft-bullet covered bonds: payments have to be made when due according to the original schedule. Failure to pay on the SMD does not trigger covered bond default. The extension period grants more time (typically at least 12 months) to repay the covered bonds, setting a new Final Maturity Date (FMD). Failure to pay on the FMD triggers default and acceleration of the covered bond. Soft bullet structures and, more rarely, CPT structures as well (cf. the next bullet point), exist to counter the refinancing risk mentioned above. With regard to possible extension periods, a postponement of maturity by twelve months has become established under soft bullet structures. Conditional pass-through covered bonds (CPT): payments have to be made when due according to the original schedule. Failure to pay by the SMD does not trigger default of that covered bond. The affected covered bond goes into pass-through mode. All other outstanding covered bonds are not affected and would only trigger the pass-through mode one after another if they are not redeemed on their