Sector Flash - Covered Bonds: Austria’s path to a new covered bond legislative framework

  • After 16 years in which covered bonds in Austria were issued under three different legal frameworks, the long-awaited and updated single framework is close to being introduced.
  • The Austrian Ministry of Finance published a draft of the new covered bond legislation. Following a consultation period and the implementation of potential changes, the new law is scheduled to come into force on 8 July 2021.
  • The key changes concern new LTV limits, the introduction of a liquidity buffer and a soft-bullet structure, OC requirements and the introduction of multiple cover pools.
  • However, several aspects need further clarification in the upcoming weeks, in our view, with regard to both primary and secondary legislation.

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