DOCSLIB.ORG

EUR 10,000,000,000 Debt Issuance Programme (The "Programme")

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
EUR 10,000,000,000 Debt Issuance Programme (The BASE PROSPECTUS 18 March 2019 This document constitutes two base prospectuses for the purpose of Article 5 (4) of the Directive 2003/71/EC, as amended (the "Prospectus Directive"), (i) the base prospectus of BAWAG Group AG in respect of non-equity securities within the meaning of Article 22 (6) no.(4) of the Commission Regulation (EC) No. 809/2004 of 29 April 2004, as amended, ("Non-Equity Securities") and (ii) the base prospectus of BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft in respect of Non-Equity Securities (together, the "Debt Issuance Programme Prospectus" or the "Base Prospectus"). BAWAG Group AG BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft Vienna, Republic of Austria Vienna, Republic of Austria – Issuer – – Issuer – EUR 10,000,000,000 Debt Issuance Programme (the "Programme") Application has been made to list notes to be issued under the EUR 10,000,000,000 Debt Issuance Programme (the "Notes") on the official list of the Luxembourg Stock Exchange (Bourse de Luxembourg) (the "Official List") and to trade Notes on the regulated market of the Luxembourg Stock Exchange which is a regulated market within the meaning of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (as amended, "MiFID II") and appears on the list of regulated markets issued by the European Commission (the "Regulated Market"). Notes issued issued under the EUR 10,000,000,000 Debt Issuance Programme may also be listed on the Official Market ("Amtlicher Handel") and the Third Market ("Dritter Markt") of the Vienna Stock Exchange. BAWAG Group AG ("BAWAG") and BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft ("BAWAG P.S.K.") (each an "Issuer" and together, the "Issuers") have each requested the Commission de Surveillance du Secteur Financier (the "CSSF") of the Grand Duchy of Luxembourg ("Luxembourg") in its capacity as competent authority under the Luxembourg Act dated 10 July 2005 relating to prospectuses for securities (Loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilières), as amended (the "Luxembourg Prospectus Law"), which implements Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 as amended (the "Prospectus Directive"), to provide the competent authorities in the Republic of Austria ("Austria") and the Federal Republic of Germany ("Germany") with a certificate of approval attesting that the Base Prospectus has been drawn up in accordance with the Luxembourg Prospectus Law (each a "Notification"). Each Issuer may request the CSSF to provide competent authorities in additional host Member States within the European Economic Area with a Notification. Unlisted Notes may be issued pursuant to this Programme. The relevant Final Terms in respect of the issue of any Notes will specify whether or not such Notes will be admitted to trading on the markets (or any other market and/or stock exchange). Prospective investors should have regard to the factors described under the section headed "Risk Factors" in this Base Prospectus. This document does not constitute an offer to sell, or the solicitation of an offer to buy Notes in any jurisdiction where such offer or solicitation is unlawful. The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and are being sold pursuant to an exemption from the registration requirements of the Securities Act. Subject to certain exceptions, the Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act). This Base Prospectus was approved by the CSSF, was filed with the CSSF and will be published in electronic form on the website of the Luxembourg Stock Exchange (www.bourse.lu) and will be available free of charge at the specified offices of the Issuers. This Base Prospectus is valid for a period of 12 months after its approval. The CSSF assumes no responsibility as to the economic and financial soundness of the transaction or the quality or solvency of the Issuers pursuant to Article 7 (7) of the Luxembourg Prospectus Law. Arranger: Citigroup Dealers BAWAG P.S.K. Citigroup The date of this Base Prospectus is 18 March 2019. RESPONSIBILITY STATEMENT BAWAG with its registered office in Vienna, Austria, and BAWAG P.S.K. with its registered office in Vienna, Austria, accept responsibility for the information given in this Base Prospectus and for the information which will be contained in the Final Terms (as defined herein). Each Issuer declares that, having taken all reasonable care to ensure that such is the case, the information contained in this Base Prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import. NOTICE This Base Prospectus should be read and understood in conjunction with any supplement thereto and with any other document incorporated herein by reference. Full information on each Issuer and any tranche of notes (the "Tranche" or "Tranche of Notes") is only available on the basis of the combination of the Base Prospectus and the relevant final terms (the "Final Terms"). For the avoidance of doubt, the content of websites this Base Prospectus refers to in hyperlinks does not form part of the Base Prospectus. BAWAG (together with its consolidated subsidiaries, including BAWAG P.S.K., the "BAWAG Group") and BAWAG P.S.K. (together with its consolidated subsidiaries the "BAWAG P.S.K. Group") have each confirmed to Citigroup Global Markets Limited (the "Arranger") as well as to BAWAG P.S.K., Citigroup Global Markets Limited and Citigroup Global Markets Europe AG (together the "Dealers") that this Base Prospectus contains all information with regard to the Issuers and the Notes which is material in the context of the Programme and the issue and offering of Notes thereunder; that the information contained in this Base Prospectus is accurate and complete in all material respects and is not misleading; that any opinions and intentions expressed herein are honestly held and based on reasonable assumptions; that there are no other facts the omission of which would make any statement, whether fact or opinion, in this Base Prospectus misleading in any material respect; and that all reasonable enquiries have been made to ascertain all facts and to verify the accuracy of all statements contained herein. No person is or has been authorized to give any information or to make any representation, which is not contained in, or not consistent with this Base Prospectus or any other document entered into in relation to the Programme or any other information or representation supplied in connection with the Programme and, if given or made, such information must not be relied upon as having been authorized by the Issuer or any of the Dealers. This Base Prospectus is valid for twelve months following its date of approval and it and any supplement hereto as well as any Final Terms reflect the status as of their respective dates of publication. The offering, sale or delivery of any Notes may not be taken as an implication that the information contained in such documents is accurate and complete subsequent to their respective dates of publication or that there has been no adverse change in the financial condition of the Issuer since such date or that any other information supplied in connection with the Programme is accurate at any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same. To the extent permitted by the laws of any relevant jurisdiction neither the Arranger nor any Dealer nor any other person mentioned in this Base Prospectus, excluding the Issuers, is responsible for the information contained in this Base Prospectus or any supplement hereof, or any Final Terms or any other document incorporated herein by reference, and accordingly, and to the extent permitted by the laws of any relevant jurisdiction, none of these persons accepts any responsibility for the accuracy and completeness of the information contained in any of these documents. Neither this Base Prospectus nor any Final Terms constitute an offer or invitation by or on behalf of the Issuers or the Dealers to any person to subscribe for or to purchase any Notes. The language of this Base Prospectus is English. With the exception of the original German language Consolidated Annual Statements of BAWAG P.S.K. Group for 2018 and 2017 as incorporated by reference into this Base Prospectus, any part of this Base Prospectus in the German language constitutes a translation. The parts of the Consolidated Annual Financial Statements of BAWAG Group for 2018 and 2017 incorporated by reference into this Base Prospectus are non-binding English language convenience translations, whereby only the German language version is binding. 2 In respect of the issue of any Tranche of Notes under the Programme, the German text of the Terms and Conditions may be controlling and binding if so specified in the relevant Final Terms. The Issuers accept responsibility for the information contained in this Base Prospectus, including the documents incorporated by reference. The Issuers confirm that the non-binding translation of the Terms and Conditions, either in the German or English language, correctly and adequately reflects the respective binding language version. The distribution of this Base Prospectus and any Final Terms and the offering, sale and delivery of Notes in certain jurisdictions may be restricted by law.
Load more

Recommended publications
  • What Are Covered Bonds and Why Should Anyone Care?
    What are Covered Bonds and Why Should Anyone Care? Michael S. Gambro, Anna H. Glick, Frank Polverino, Patrick T. Quinn, and Jordan M. Schwartz The authors believe that, given the current political impetus to promote lower costs of funds and greater liquidity for mortgage nancing and a diversity of funding sources, there will be rapid developments in the area of covered bonds. Covered bonds are a form of long-term secured nanc- the issuer’s credit rating. Covered bonds may be issued ing that has been used in Europe for centuries but have pursuant to a specic statutory framework or on a not previously gained popularity in the U.S. credit contractual basis. A structured nance legal structure markets. To date, only two issuers in the United States may be utilized in jurisdictions like the U.S. that lack a have issued covered bonds. However, in light of the statutory framework, or for transactions that do not t recent turmoil in the credit markets, covered bonds are within an existing statutory framework. being promoted as a technique to stimulate the capital markets and provide a long-term funding source for mortgage loan originators. Comparison of Covered Bonds and Mortgage- On July 15, 2008, a nal Covered Bond Policy Backed Securities Statement (the ‘‘Policy Statement’’) was issued by the Federal Deposit Insurance Corporation (the ‘‘FDIC’’).1 Although both mortgage-backed securities (‘‘MBS’’) In addition, on July 28, 2008, the United States Depart- and covered bonds are potential sources of long-term ment of the Treasury issued a best practices guide funding for mortgage loans, there are several signi- intended to ‘‘encourage growth of the covered bond cant dierences between them: market in the United States.’’2 Although no specic E In a typical MBS transaction, the mortgage loans covered bond statute exists in the United States at this are generally treated as having been sold under time, on July 30, 2008, Congressman Scott Garrett (R- current U.S.
    [Show full text]
  • Mortgage Covered Bonds
    COVERED BONDS CREDIT OPINION Deutsche Pfandbriefbank AG - Mortgage 12 July 2019 Covered Bonds New Issue Update to New Issue Report, reflecting data as of 31 March 2019 - German covered bonds Ratings Closing date Exhibit 1 September 2001 Cover Pool (€) Ordinary Cover Pool Assets Covered Bonds (€) Rating 19,855,385,490 Commercial mortgage loans 17,159,274,896 Aa1 TABLE OF CONTENTS Ratings 1 Source: Moody's Investors Service Summary 1 Credit strengths 1 Summary Credit challenges 2 The covered bonds issued by Deutsche Pfandbriefbank AG (the issuer) under the Deutsche Key characteristics 3 Pfandbriefbank AG - Mortgage Covered Bonds programme are full recourse to the issuer and Covered bond description 3 are secured by a cover pool of assets consisting of commercial assets (73.7%), multi-family Covered bond analysis 4 assets (19.4%), supplementary assets (6.8%) and residential assets (0.1%). Cover pool description 8 Cover pool analysis 11 Credit strengths include the full recourse of the covered bonds to the issuer and support Methodology and monitoring 13 provided by the German legal framework for Pfandbriefe, which provides for the issuer's Appendix: Income underwriting and regulation and supervision. valuation 14 Moody's related publications 15 Credit challenges include the high level of dependency on the issuer. As with most covered bonds in Europe, there are few restrictions on the future composition of the cover pool. 56.4% of the commercial mortgages have bullet repayment. Analyst Contacts Francesca Falconi +44.20.7772.1667 Our credit analysis takes into account the cover pool's credit quality, which is reflected in Analyst the collateral score of 6.8%, and the current over-collateralisation (OC) of 17.1% (on an [email protected] unstressed present value basis) as of 31 March 2019.
    [Show full text]
  • Moody's Reviews Pfandbriefe of Several German Landesbanken and Their Subsidiaries
    Announcement: Moody's reviews Pfandbriefe of several German Landesbanken and their subsidiaries Global Credit Research - 06 Jul 2011 London, 06 July 2011 -- Moody's Investors Service has today placed the following covered bonds on review for downgrade, prompted by its review of the respective issuers, implemented on 1 July 2011: - Bayerische Landesbank's mortgage Pfandbriefe: Aaa placed on review for downgrade; previous rating action 21 August 1998, Aaa assigned; - Bayerische Landesbank's public-sector Pfandbriefe: Aaa placed on review for downgrade; previous rating action 21 August 1998, Aaa assigned; - HSH Nordbank AG's mortgage Pfandbriefe: Aaa placed on review for downgrade; previous rating action 7 December 2010, Aaa assigned; - HSH Nordbank AG's public-sector Pfandbriefe: Aaa placed on review for downgrade; previous rating action 18 May 2010, Aaa confirmed; - HSH Nordbank AG's ship Pfandbriefe: A2 placed on review for downgrade; previous rating action 5 May 2010, downgraded to A2; - WestLB's public-sector Pfandbriefe: Aaa placed on review for downgrade; previous rating action 12 May 2006, Aaa assigned; - Deutsche Kreditbank AG's mortgage Pfandbriefe: Aaa placed on review for downgrade; previous rating action 15 July 2009, Aaa assigned; and - Deutsche Kreditbank AG's public-sector Pfandbriefe: Aaa placed on review for downgrade; previous rating action 5 December 2006, Aaa assigned. The ratings assigned to the covered bonds issued by other Landesbanken and their subsidiaries are not affected by this rating action. RATINGS RATIONALE The above reviews were prompted by the review of the respective issuer ratings, see press release "Moody's reviews ratings of German Landesbanken", published 1 July 2011.
    [Show full text]
  • Covered Bonds As a Source of Funding for Banks' Mortgage Portfolios
    COVERED BONDS AS A SOUrcE OF Funding FOR BaNKS’ MORTGAge PORTFOLIOS BANK OF CANADA • FinANCIAL SYSTEM REView • JUNE 2018 37 Covered Bonds as a Source of Funding for Banks’ Mortgage Portfolios Toni Ahnert Covered bonds funded only about 3 per cent of the assets of the largest banks and 9 per cent of Canadian mortgages in 2017. Instead, banks have been relying primarily on relatively cheap government-guaranteed mortgage funding options. An increasing portion of mortgages are uninsured and not eligible for government-guaranteed funding, creating the need for alternative funding sources. Covered bonds may fill part of this need, helping to generate a diversified and stable funding mix for mortgages. Overcollateralization requirements and dynamic replenishment of the col- lateral pool can increase risks to unsecured creditors. This could add to the fragility of a bank in the face of negative shocks, with potential spill- overs to other parts of the financial system. Several policy tools are available to help balance the costs and benefits of covered bonds. These include simple issuance caps and adjustments to the pricing of deposit insurance premiums, as well as other types of prudential regulation. Introduction Banks’ choices for funding mortgages and other business activities have an important effect on how efficiently they provide banking services and how effectively they manage risks to their own business and to the financial system. Canadian banks typically use a broad array of funding sources, including equity, deposits and wholesale funding instruments (Chart 1).1 The terms of funding sources differ, ranging from short-term deposits and money market instruments to longer-term funding, including covered bonds and 5- and 10-year debentures.
    [Show full text]
  • COVERED BONDS: a Primer
    COVERED BONDS: A Primer By Charles D. Lansden As the securitization of residential mortgage loans ground to a halt during the current credit crisis, the Department of the Treasury and the Federal Deposit Insurance Corporation published guidance for the issuance of covered bonds as an alternative means of financing residential mortgages. A covered bond is a debt instrument that is secured by a pledge of a segregated pool of assets (a “cover pool”), but is paid back from an issuer’s cash flow rather than from the assets themselves. A depository institution may directly issue covered bonds or issue a mortgage bond to a bankruptcy remote special purpose vehicle that, in turn, issues covered bonds. Both the Treasury and the FDIC currently restrict the cover pool to residential mortgages, but each of these institutions anticipates that the development of a U.S. covered bond market could lead to other as-set classes serving as collateral in cover pools. There are significant differences between covered bonds and mortgage-backed securities: (i) a covered bond remains on the issuer’s balance sheet; (ii) an investor has recourse against both the issuer and the cover pool; (iii) principal and interest on the covered bond are paid from an issuer’s cash flow; (iv) non-performing assets in the cover pool can be replaced; and (v) guaranteed investment contracts limit the prepayment risk for covered bonds in the event of the issuer’s default. Given that a covered bond is the direct obligation of an issuer, potential investors were concerned about their access to the cover pool upon the issuer’s failure.
    [Show full text]
  • Green Covered Bonds: Building Green Cover Pools Covered Bonds Are an Ideal Tool to Finance Low Carbon Infrastructure, Having Been Used in Other Public Priority Areas
    BRIEFING PAPER Green Covered Bonds: building green cover pools Covered bonds are an ideal tool to finance low carbon infrastructure, having been used in other public priority areas. Identifying existing green cover pools and developing frameworks for other low carbon assets will help scale up investment. The first green covered bonds Covered Bonds issuance (2011–2015) were issued in 2016 The green bonds market has seen increased 800 diversification in 2016. One of the new green debt products that entered the market was the first green covered bond issued in Germany. 600 The Bank of China also issued a ‘dual recourse’ green bond in November 2016 (not technically a ‘covered’ bond given the lack of 400 dedicated legislation). The USD 500m issue Billions (EUR) is the first of its kind, not only because of the dual recourse structure, but also due to the cover pool, which is made up of Chinese 200 climate-aligned bonds on the banks’ balance sheets. The bonds are part of the ChinaBond China Climate Aligned Bond Index, developed 0 by CCDC, CECEP and Climate Bonds. 2011 2012 2013 2014 2015 Covered bonds support cheaper • Public Sector • Mortgage • Ships • Mixed Assets lending in public sector priority Source: European Covered Bond Council Fact Book, 2016 areas Covered bond markets have proven to be a reliable source of long-term financing for Covered bonds are highly-regulated securities with superior credit ratings and banks to on-lend to specific priority sectors, in lower funding costs than unsecured debt, thanks to a dual recourse structure where bond particular housing and public infrastructure.
    [Show full text]
  • The Covered Bond Market1
    Frank Packer Ryan Stever Christian Upper +41 61 280 8449 +41 61 280 9615 +41 61 280 8416 [email protected] [email protected] [email protected] The covered bond market1 The covered bond market offers investors an alternative to developed country government securities. The valuation of covered bonds is complex. While there is some evidence of differences in the pricing of these bonds by nationality of issuer, these appear to be only weakly related to differences in the respective legislative frameworks. Recent cases show the pricing of covered bonds to be robust to idiosyncratic shocks to issuer credit risk as well as more systemic shocks to the value of cover pools. JEL classification: G11, G12, G15. Over the past decade covered bonds, or securities issued by financial institutions that are secured by dedicated collateral, have become one of the largest asset classes in the European bond market and an important source of finance for mortgage lending. The collateral, or “cover pool”, is usually put together so as to obtain the highest possible triple-A credit rating. As a consequence, covered bonds offer an alternative to developed country government securities for bond investors interested in only the most highly rated securities. Drawing on the BIS international debt securities statistics and other data sources, this feature analyses the recent evolution of the covered bond market. Exploring the main issues involved in assessing the risk of covered bonds, the feature also documents significant divergences among the major rating agencies. An examination of the determinants of covered bond prices suggests that, while the nationality of the issuer matters, the related differences are generally small.
    [Show full text]
  • Bawag Group Ag Quantitative Disclosure Report According to Regulation (Eu) No. 575/2013 (“Crr”)
    QUANTITATIVE DISCLOSURE BAWAG GROUP AG QUANTITATIVE DISCLOSURE REPORT ACCORDING TO REGULATION (EU) NO. 575/2013 (“CRR”) 2019 1 QUANTITATIVE DISCLOSURE LIST OF TABLES Table 1: Total assets ......................................................................................................................................................6 Table 2: Total liabilities and equity..................................................................................................................................7 Table 3: Differences between accounting and regulatory scopes of consolidation and (…) (1/2) ......................................8 Table 3: Differences between accounting and regulatory scopes of consolidation and (…) (2/2) ......................................9 Table 4: Outline of the differences in the scopes of consolidation (entity by entity).........................................................10 Table 5: Scope of consolidation (IFRS, CRR) (1/3) .......................................................................................................11 Table 5: Scope of consolidation (IFRS, CRR) (2/3) .......................................................................................................12 Table 5: Scope of consolidation (IFRS, CRR) (3/3) .......................................................................................................13 Table 6: Main features, full terms and conditions of capital instruments ........................................................................14 Table 7: Overview of RWAs
    [Show full text]
  • New European Covered Bond Framework
    Latham & Watkins Capital Markets Practice April 22, 2019 | Number 2488 We’ve Got You Covered: New European Covered Bond Framework The new framework should simplify the path for issuers seeking to market European covered bonds to investors in the US. Key Points: The new framework will create minimum product and technical standards for covered bonds, focusing on high-quality cover pool assets. Covered bonds, which are not subject to “bail-in” powers, will have reinforced transparency and investor protections. Spanish covered bond programs will require the most updating, compared with the existing regime. Issuers should consider amending their documentation to facilitate marketing in the US. Covered bonds offer unique benefits to both issuers and investors. Banks and other credit institutions have historically relied on covered bonds as an inexpensive source of funding and have purchased them to use as eligible collateral with the Eurosystem credit window, while institutional investors have valued the favorable risk-weighting of these stable and secure instruments, which typically combine a bankruptcy-remote asset-backed security with the further support of a direct claim against the credit institution issuer1. To date, covered bonds have been issued either pursuant to long-standing statutory frameworks created by the national laws of several EU Member States or by more recent contractual arrangements developed by market participants. However, the liquidity of the European covered bond market has been complicated by such disparate legal
    [Show full text]
  • S&P Global Ratings' Covered Bonds Primer
    S&P Global Ratings' Covered Bonds Primer June 20, 2019 This covered bonds primer provides a comprehensive guide to the fundamentals and key features PRIMARY CREDIT ANALYSTS of the product. Antonio Farina Madrid Let's start with an obvious question… (34) 91-788-7226 antonio.farina @spglobal.com What Is A Covered Bond? Marta Escutia A covered bond is a debt instrument secured by a cover pool of assets. As long as the issuer is Madrid + 34 91 788 7225 solvent, it is obliged to repay its covered bonds in full on their scheduled maturity dates. If the marta.escutia issuer is insolvent, the proceeds from the cover pool assets will be used to repay the bonds. @spglobal.com Covered bonds were first introduced in Prussia in 1769 by Frederick the Great, and in Denmark in ANALYTICAL MANAGER 1797. France issued the first "obligations foncieres" in 1852. Despite such a long history, it was Barbara Florian not until the end of the twentieth century that the size and geographic scope of this market Milan broadened considerably, boosted by the introduction of "jumbo" covered bonds in 1995, the (39) 02-72111-265 introduction of the euro in 1999, and the approval of dedicated legislative frameworks in a number barbara.florian @spglobal.com of new countries. Figure 1 www.spglobal.com/ratingsdirect June 20, 2019 1 S&P Global Ratings' Covered Bonds Primer Key Features Of Covered Bonds - The bond is issued by--or bondholders otherwise have full recourse to--a credit institution which is subject to public supervision and regulation.
    [Show full text]
  • Frequently Asked Questions About Covered Bonds
    FREQUENTLY ASKED QUESTIONS ABOUT COVERED BONDS bolstering its popularity. See “Covered Bond Background Structure Outside of the United States.” European What are covered bonds? issuances remained at historic lows in 2014, and issuances of covered bonds into the United States by Covered bonds are debt obligations that provide non‐U.S. issuers continued to drop dramatically in recourse to the issuer, usually a bank. Upon an issuer 2014 (to approximately $10 billion) as cross currency default, covered bond holders also have recourse to a swap costs made issuing bonds in USD less favorable. pool of collateral (known as the “cover pool”), which There has been some recovery in the issuance of is maintained separate from the issuer’s other assets. covered bonds into the United States in 2015 as cross What type of assets can make up the cover pool? currency swap costs have declined. The cover pool usually consists of high quality assets, How are covered bonds issued? including residential mortgages, public debt, or ship Covered bonds can be issued as a single issuance or loans. Cash, or cash equivalents, also may serve as as a program. Under the Securities Act of 1933 (the cover pool collateral. “Securities Act”), covered bonds are regulated as Are covered bonds a new product? securities and each issuance must be registered under Although relatively new to the United States, covered the Securities Act or exempt from registration. bonds are not a new product. Covered bonds have Covered bond programs issuing in the United States been used to raise capital in Europe since 1769, when often rely on the Rule 144A exemption; however, on the first covered bond was issued in Prussia to July 30, 2012, the Royal Bank of Canada obtained SEC finance agriculture.
    [Show full text]
  • Covered Bonds Update in the United States
    Covered Bonds Update in the United States October 21, 2020 Jerry Marlatt Laura Drumm Partner RBC Capital Markets [email protected] [email protected] Background: What Are Covered Bonds? 2 What are Covered Bonds? Covered Bond Characteristics • Senior debt of a regulated financial entity • Generally not subject to bail-in • Secured by a pool of financial assets • Mortgage loans – residential or commercial • Public sector obligations • Ship loans • Protected from acceleration in the event of issuer insolvency • By statute or legal structure • Collateral is isolated from insolvency estate of the issuer • Collateral pays bonds as scheduled through maturity • A dynamic collateral pool – refreshed every month • Typically bullet maturity, fixed rate bonds • Repayment liabilities remain on the balance sheet of the originator • Most countries have statutes enabling covered bonds • Very strong implicit government support in many jurisdictions 3 Benefits to Issuing Banks Attributes of Covered Bonds • Lower funding cost than senior bank debt • Extension of WAM for bank funding • Typical maturities for covered bonds in the EU of seven years or more. • Diversification of funding base • Investors typically do not buy RMBS or senior bank debt • Critical funding source in Europe in the sovereign debt crisis • The market was functional throughout the crisis • Avoids “bail-in” risk • Mortgage modifications to accommodate borrower are easy; no competing interests • Brings mortgage finance out of the ‘shadow banking’ world • US legislation would level
    [Show full text]