Select Framework(s)
Results are displayed below
- Australia
- Australian Covered Bonds
- Austria
- FBS - Fundierte Bankschuldverschreibungen
- Pfandbriefe
- Belgium
- Belgium Covered Bonds
- Brazil
- Brazil Covered Bonds
- Bulgaria
- Bulgarian Covered Bonds
- Canada
- Canadian Covered Bonds
- Chile
- Bonos Hipotecarios (BH) - Chilean Covered Bonds
- Cyprus
- Cypriot Covered Bonds
- Czech Republic
- Czech Republic Covered Bonds
- Denmark
- Realkreditobligationer - RO
- Særligt Dækkede Obligationer - SDO
- Særligt Dækkede Realkreditobligationer - SDRO
- Estonia
- Estionian Covered Bonds
- Finland
- Finnish Covered Bonds
- France
- Caisse de Refinancement de l'Habitat - CRH
- General Law Based CBs
- Obligations Foncières - OF
- Obligations à l'Habitat - OH
- Germany
- Pfandbriefe
- Greece
- Greek Covered Bonds
- Hungary
- Hungarian Covered Bonds
- Iceland
- Icelandic Covered Bonds
- Ireland
- Asset Covered Securities - ACS
- Italy
- Obbligazioni Bancarie Garantite - OBG
- Luxembourg
- Lettres de Gage hypothécaires
- Lettres de Gage mobilières
- Lettres de Gage mutuelles
- Lettres de Gage publiques
- Netherlands
- Dutch registered CBs programmes
- New Zealand
- New Zealand Covered Bonds
- Norway
- Norwegian Covered Bonds
- Poland
- Polish Covered Bonds
- Portugal
- Mortgage CB (Obrigações Hipotecárias)
- Public Sector CB (Obrigações sobre o Sector Público)
- Romania
- Obligatiuni Ipotecare - Mortgage Covered Bonds
- Russia
- Mortgage Obligations
- Singapore
- Singapore Covered Bonds
- Slovakia
- Slovakian Covered Bonds
- Slovenia
- Slovenian Covered Bonds
- South Korea
- South Korean Covered Bonds
- Spain
- Cédulas Hipotecarias - CH
- Sweden
- Swedish Covered Bonds
- Switzerland
- Swiss Pfandbriefe
- Contractual Covered Bonds
- Credit Suisse CB
- UBS CB
- Valiant
- Turkey
- Turkish Covered Bonds
- United Kingdom
- Regulated Covered Bonds - RCB
- Unregulated Covered Bonds
- United States
- US Covered Bonds
Select Chapter(s)
- I. STRUCTURE OF THE ISSUER
- II. FRAMEWORK
- III. COVER ASSETS
- IV. VALUATION OF THE MORTGAGE COVER POOL & LTV CRITERIA
- V. ASSET-LIABILITY GUIDELINES
- VI. COVER POOL MONITOR & BANKING SUPERVISION
- VII. SEGREGATION OF ASSETS & BANKRUPTCY REMOTENESS OF COVERED BONDS
- VIII. RISK WEIGHTING & COMPLIANCE WITH EUROPEAN LEGISLATION
- IX. ADDITIONAL INFORMATION
Questions | Australian Covered Bonds |
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I. STRUCTURE OF THE ISSUER | |
1. Who is the issuer? |
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(1) Comments: Universal credit institution = conventional, single-issuer structure; Specialized credit institution = Covered Bond Credit Institution (“CBCI”); Special Purpose Entities (SPE) = also for smaller-sized issuers to fund in aggregated structure but issuance is by an SPE rather than an APRA authorised and regulated CBCI. | |
2. Does the bondholder have recourse to the credit institution? |
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(2) Comments: Pari passu with other secured ADI (The use of the term ‘ADI’ refers to an Authorised Deposit-taking Institution, which is the Australian equivalent of an EEA credit institution, or bank) creditors but subordinate to depositors of the ADI; only the segregated assets in the cover pool are exclusively for bondholders and available to them should the ADI be unable to meet their claim in the first instance. | |
3. Who owns the cover assets? |
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(3) Comments: Acquired by the SPE/SPV through equitable assignment with an inter-company loan made by the issuing ADI. | |
4. Is the issuer the originator of the assets? |
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(4) Comments: Almost always this will be the case but there is no statutory prohibition on them having been originated by another entity provided they are assets in Australia legally on the balance sheet of the issuer. | |
II. FRAMEWORK | |
1. Are the bonds governed by a special covered bond Legislation? |
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(5) Comments: Through an Act amending the Banking Act 1959, and for related purposes, in the form of the Banking Amendment (Covered Bonds) Bill (No.1) 2011. | |
2. What is the legal framework for bankruptcy of the issuer of covered bonds? |
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(6) Comments: Banking Act 1959. | |
III. COVER ASSETS | |
1. What types of assets may be included in cover pools? |
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(7)
Comments: : An asset in a cover pool must be one of the following: a)cash; b)an at call deposit held with an ADI and convertible into cash within 2 business days; c)a bank accepted bill or certificate of deposit that: i.is eligible for repurchase transactions with the Reserve Bank; and ii.was not issued by the ADI that issued the covered bonds secured by the assets in the cover pool; d)a bond, note, debenture or other instrument issued or guaranteed by the Commonwealth, a State or a Territory; e)a loan secured by a mortgage, charge or other security interest over residential property in Australia; f)a loan secured by a mortgage, charge or other security interest over commercial property in Australia; g)a mortgage insurance policy or other asset related to a loan covered by paragraph (e) or (f); h)a contractual right relating to the holding or management of another asset in the cover pool; i)a derivative held for the purposes of protecting the value of another asset in the cover pool; j)an asset of a kind prescribed by the regulations for the purposes of this paragraph. |
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2. What is the geographical scope for public sector assets? |
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(8) Comments: Only Australian “Commonwealth, State or a Territory” public debt. | |
3. What is the geographical scope for mortgage assets? |
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(9) Comments: AUS only. | |
4. Are regular covered bond specific disclosure requirements to the public mandatory? |
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(10) Comments: Not by legislation. | |
(11) Global comments for this chapter:“Commonwealth, a State or a Territory” refers to the Australian federal government (Commonwealth) or an Australian State or an Australian Territory. | |
IV. VALUATION OF THE MORTGAGE COVER POOL & LTV CRITERIA | |
1. LTV is calculated using which valuation?[4] |
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(12) Comments: Most recent valuation. | |
2. Are there any special LTV limits used solely for calculating collateralisation rates for the cover pool (if yes, specify)? |
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3. Do bondholders get the benefit of that portion of the loan which exceeds the LTV cap? |
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(13) Comments: Not by law. | |
4a. Is there an LTV cap which makes the entire loan ineligible to be put in the cover pool (if yes, specify)? |
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(14) Comments: No prohibition on a loan being in the cover pool but may not, as a matter of contract, be attributed value. | |
4b. Is there an LTV cap which would require a loan to be removed from the cover pool? |
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5. Is there any additional LTV limit on a portfolio basis? |
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V. ASSET-LIABILITY GUIDELINES | |
. Exposure to market risk | |
1. Is exposure to market risk (e.g. interest rate, currency risks) required to be mitigated by law or contract? |
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(15) Comments: Yes/No: contract-dependent; no statutory requirement | |
2. What is the primary method for the mitigation of market risk? |
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3. If the answer to the above question on market risk mitigation is “Use of derivative hedge instruments”, please specify whether those instruments are entered into: |
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4. What type of coverage test is applied? |
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(16) Comments: None by law; likely by contract. | |
5. What is the frequency of coverage calculations? |
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(17) Comments: None by law; likely by contract. | |
6. What types of stress scenarios are applied? |
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(18) Comments: None by law; likely by contract. | |
7. What is the frequency of stress test calculations? |
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(19) Comments: None by law; likely by contract. | |
. Exposure to liquidity risk | |
8. Is exposure to liquidity risk required to be mitigated by law or contract? |
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(20) Comments: None by law; likely by contract. | |
9. What is the primary method for the mitigation of liquidity risk on interest payments? |
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10. What is the primary method for the mitigation of liquidity risk on principal payments? |
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11. Is there any grace period in case of a breach of liquidity risk mitigants? |
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(21) Comments: None by law; likely by contract. | |
12. What is the consequence of not fixing a breach of liquidity risk mitigants? |
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(22) Comments: None by law; likely by contract. | |
. Monitoring of exposures to market and liquidity risk | |
13. Who monitors the maintenance of coverage tests? |
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(23) Comments: An Approved Auditor or AFSL holder (Australian Financial Services Licenseholder) acting as Cover Pool Monitor – not required by law; likely as a matter of contract. | |
14. Are there any regular public reporting requirements for market and liquidity risk? |
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. Overcollateralisation | |
15. Is mandatory minimum overcollateralisation required? |
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16. What is the level of minimum mandatory overcollateralisation? |
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17. If mandatory overcollateralisation is required, are the amounts above the minimum OC level protected? |
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(24) Comments: Between the statutory minimum and the contractual requirement but amounts in excess of the contractual (i.e. the ‘voluntary OC’ are not protected but instead serve as a management buffer for the issuer. | |
18. Is there any grace period in case of a breach of the coverage test? |
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(25) Comments: Not by law because there is no legislative ACT; likely by contract. | |
19. What is the consequence of not fixing a breach of the coverage test? |
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VI. COVER POOL MONITOR & BANKING SUPERVISION | |
1. Is a special license required for the issuing of covered bonds? |
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(26) Comments: No, additional requirements for single-issuer or CBCI issuance models; yes, with additional requirements (license/authorization) if multi-issuer SPE model. | |
2. Are there special reporting duties of the covered bond issuer to the supervision authority concerning covered bonds and the cover pool, which go beyond the regular banking supervision? |
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(27) Comments: Obligation rests with the Cover Pool Monitor; not the issuer. | |
3. What is the role of the banking supervision regarding covered bonds? |
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(28) Comments: Noting footnote 8, the obligation rests with the Cover Pool Monitor; not the issuer. | |
4. Is there a special role of banking supervision in crisis regarding covered bonds? |
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5. Is there a cover pool monitor independent from the issuer? |
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6. If there is an independent cover pool monitor, what are its duties? |
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VII. SEGREGATION OF ASSETS & BANKRUPTCY REMOTENESS OF COVERED BONDS | |
1. Do covered bonds automatically accelerate when the credit institution goes insolvent? |
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2. What is the cover pool? |
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(29) Comments: Equitable assignment in the case of mortgages but not in the case of cash, bonds or swaps. | |
3. How are the covered bondholders protected against claims from other creditors in case of insolvency of the issuer? |
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4. Is there recourse to the credit institution’s insolvency estate upon a cover pool default? |
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5. Are there provisions that require derivatives to continue in case of insolvency of the credit institution? |
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(30) Comments: Not by law; likely by contract. | |
6. If derivatives are permitted in the cover pool, what is their ranking? |
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(31) Comments: Not by law; likely by contract. In the case of total rate of return swaps, this is likely to be senior; in the case of currency and any basis swaps to address timing mismatches with respect to the intercompany loan, they are likely to be pari passu with covered bond holders). | |
VIII. RISK WEIGHTING & COMPLIANCE WITH EUROPEAN LEGISLATION | |
1. Does the covered bond fulfil the criteria of UCITS 52(4)? |
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(32) Comments: Australian credit institutions are not EEA entities and therefore cannot do so. | |
2. For further information regarding the compliance to the criteria of Article 129 of the Capital Requirements Regulation (CRR), please see the following links: http://ecbc.hypo.org/Content/default.asp?PageID=504#position https://www.coveredbondlabel.com | |
3. Are listed covered bonds eligible in repo transactions with the national central bank? |
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(33) Comments: Being listed is not relevant. See Reserve Bank of Australia website for eligible securities. http://www.rba.gov.au/mkt-operations/tech-notes/eligible-securities.html | |
4. Are there any special investment regulations regarding covered bonds? |
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IX. ADDITIONAL INFORMATION | |
1. Link to National Association representing covered bond interests |
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(34) Comments: Contact: Alex Sell, Chief Operating Officer, asell@securitisation.com.au | |
2. Link to national regulators and supervisors |
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(35) Comments: Legislation permitted covered bonds of any type (legislative or contractual) not permitted until legislation has been enacted (expected November 2011). | |
3. Fact Book Country Chapter |
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4. Hypostat Country Chapter |
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