Sweden
Sweden 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 Covered Bond Issuance Act was amended in 2010 giving the administrator-in-bankruptcy an express mandate, on behalf of the bankruptcy estate, to take out liquidity loans and enter into other agreements for the purpose of maintaining matching between the cover pool, covered bonds and derivative contracts. The administrator has an extensive mandate to enter into agreements, not only to achieve a liquidity balance but also to achieve a balance in respect of currencies, interest rates and interest periods. |
| 1 | What types of assets may be included in cover pools? |
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| Comments: Exposures to credit institutions can be included as substitute assets. Substitute collateral may not exceed 20 percent of the cover pool. In special circumstances, Finansinspektionen may, in an individual case, allow the proportion of substitute collateral to be at most 30 percent of the cover pool during a limited period of time. Mortgage loans that have been granted against a pledge over real property, site leasehold rights or tenant-owner rights that are intended for office or commercial purposes may not exceed 10 percent of the cover pool. |
| 2 | What is the geographical scope for public sector assets? |
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| 3 | What is the geographical scope for mortgage assets? |
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| 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: When granting a mortgage loan, the loan may be included in the cover pool to the extent that the loan, relative to the collateral, lies within: 1. 75 percent of the market value, regarding real property, site leasehold rights and tenant-owner rights intended for residential purposes, 2. 70 percent of the market value, regarding real property intended for agricultural purposes, and 3. 60 percent of the market value, regarding real property, site leasehold rights and tenant-owner rights intended for commercial or office purposes. |
| 3 | Do bondholders get the benefit of that portion of the loan which exceeds the LTV cap? |
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| Comments: The bondholders get this benefit in line with other creditors. |
| 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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| 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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| 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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| 2 | What is the primary method for the mitigation of market risk? |
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| Comments: Natural matching is the primary method but also derivatives are used. |
| 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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| 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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| 12 | What is the consequence of not fixing a breach of liquidity risk mitigants? |
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| 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: The level is not explicitly stated in the law. |
| 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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| 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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| 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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| Comments: All assets and derivatives on the cover register. |
| 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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| 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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ASCB - Association of Swedish Covered Bond issuers