Cédulas Hipotecarias
Spain Issuers - Legislation
| 1 | Who is the issuer? |
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| 2 | Does the bondholder have recourse to the credit institution? |
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| 3 | Who owns the cover assets? |
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| 4 | Is the issuer the originator of the assets? |
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| 1 | Are the bonds governed by a special covered bond Legislation? |
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| 2 | What is the legal framework for bankruptcy of the issuer of covered bonds? |
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| Comments: The specific legal framework defined in the Law 2/81 that regulates the mortgage market complements the general insolvency law. |
| 1 | What types of assets may be included in cover pools? |
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| Comments: According to the national law, the cédulas hipotecarias can be backed up to a limit of 5 percent of the issued capital by the substitution assets that, among the differ options described above, may include: public debt and covered bonds & MBS issued by other entities. |
| 2 | What is the geographical scope for public sector assets? |
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| Comments: In the case of cédulas hipotecarias the scope is the EU |
| 3 | What is the geographical scope for mortgage assets? |
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| Comments: In the case of cédulas hipotecarias the scope is the EU |
| 4 | Are regular covered bond specific disclosure requirements to the public mandatory? |
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| 1 | LTV is calculated using which valuation?[4] |
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| 2 | Are there any special LTV limits used solely for calculating collateralisation rates for the cover pool (if yes, specify)? |
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| Comments: LTV limits in the Spanish legislation do not apply to the cover pool (which is comprised by the entire issuer’s mortgage portfolio) but to issuance limits. Credit institutions shall not issue Cédulas Hipotecarias for an amount greater than 80 per 100 of the outstanding eligible mortgage loans and credits in their portfolios, which have to fulfil the following LTV requirements: 60 per 100 LTV in the general case and 80 per 100 for residential loans. |
| 3 | Do bondholders get the benefit of that portion of the loan which exceeds the LTV cap? |
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| 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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| Comments: See Comment on IV.2. However, the LTV caps for eligible loans affect the entire loan, i.e. no part of a loan above the LTV cap is eligible. |
| 4b | Is there an LTV cap which would require a loan to be removed from the cover pool? |
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| Comments: See Comment on IV.2 and IV.4a |
| 5 | Is there any additional LTV limit on a portfolio basis? |
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| Comments: See Comment on IV.2. |
| Exposure to market risk |
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| 1 | Is exposure to market risk (e.g. interest rate, currency risks) required to be mitigated by law or contract? |
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| Comments: The majority of mortgage loans in Spain are floating and Issuers issue mainly fixed rate bonds. As a result of that Spanish issuers hedge theses issues. This is a common practice. |
| 2 | What is the primary method for the mitigation of market risk? |
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| Comments: When the issuance is at a variable rate, then the method used will be “natural matching” |
| 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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| 5 | What is the frequency of coverage calculations? |
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| 6 | What types of stress scenarios are applied? |
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| 7 | What is the frequency of stress test calculations? |
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| Exposure to liquidity risk |
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| 8 | Is exposure to liquidity risk required to be mitigated by law or contract? |
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| Comments: The mitigation to the exposure to liquidity risk comes from the high level of over-collateralization that is required (by law) and also by the substitution assets serving as collateral of the issue. |
| 9 | What is the primary method for the mitigation of liquidity risk on interest payments? |
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| Comments: See question V.8 |
| 10 | What is the primary method for the mitigation of liquidity risk on principal payments? |
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| Comments: See question V.8 |
| 11 | Is there any grace period in case of a breach of liquidity risk mitigants? |
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| 12 | What is the consequence of not fixing a breach of liquidity risk mitigants? |
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| Comments: Not applicable |
| Monitoring of exposures to market and liquidity risk |
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| 13 | Who monitors the maintenance of coverage tests? |
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| 14 | Are there any regular public reporting requirements for market and liquidity risk? |
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| Overcollateralisation |
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| 15 | Is mandatory minimum overcollateralisation required? |
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| 16 | What is the level of minimum mandatory overcollateralisation? |
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| Comments: This level would take place if the following two conditions are fulfilled: •The entire mortgage portfolio of the issuer is eligible (see LTV limits in item IV.2). •The Issuance level amounts to 80% of mortgage portfolio |
| 17 | If mandatory overcollateralisation is required, are the amounts above the minimum OC level protected? |
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| 18 | Is there any grace period in case of a breach of the coverage test? |
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| 19 | What is the consequence of not fixing a breach of the coverage test? |
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| 1 | Is a special license required for the issuing of covered bonds? |
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| Comments: It is enough to be a credit institution. |
| 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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| 3 | What is the role of the banking supervision regarding covered bonds? |
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| 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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| Comments: There is not a genuine monitor, but only external auditors. |
| 6 | If there is an independent cover pool monitor, what are its duties? |
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| 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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| 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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| 6 | If derivatives are permitted in the cover pool, what is their ranking? |
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| Comments: Covered bonds holder have preference over the issuer’s insolvency state. |
| 1 | Does the covered bond fulfil the criteria of UCITS 22(4)? |
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| 2 | Does the covered bond legislation completely fall within the criteria of the Annex VI, Part 1, Paragraph 68 (a) to (f) of the Capital Requirements Directive (CRD)? |
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| 3 | Are listed covered bonds eligible in repo transactions with the national central bank? |
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| 4 | Are there any special investment regulations regarding covered bonds? |
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| 1 | Link to National Association representing covered bond interests |
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| 2 | Link to national regulators and supervisors |
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| 3 | Fact Book Country Chapter |
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| 4 | Hypostat Country Chapter |
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