Financial Institutions and Markets

Decree-Law No. 31/2022, of 6 May, was published, approving the Legal Regime for Covered Bonds and transposing Directive (EU) 2019/2162 and Directive (EU) 2021/2261.

Among the changes introduced by the new regime, we highlight:

• The simplification of the framework for mortgage and public sector bonds, opting for a single type of bond, regardless of the hedging asset;
• The adjustment of the catalog of eligible assets to become collaterals of covered bonds;
• The possibility of using covered bonds issued by a credit institution belonging to a group of companies, as an underlying asset in issuing covered bonds by a credit institution belonging to the same group of companies;
• The possible option for establishing joint financing structures, by which a credit institution may purchase and use credits originated by another credit institution as guarantee for the issuance of covered bonds;
• The establishment of a liquidity reserve for global guarantee, aiming to mitigate the liquidity risks associated with the covered bond programs;
• The maintenance of the current segregation, assignment of credits and entity regimes that accompany the global guarantee of the covered bond programs;
• Several amendments to the General Regime for Collective Investment Undertakings, namely in relation to the list of assets eligible for investment by UCI.