The covered bonds program established by Alpha Bank Romania, the first ever issuance of covered bonds in Romania

The covered bonds programme established by Alpha Bank Romania and their first issuance of covered bonds are the first ever in Romania. These have been based on the covered bonds legislation passed in 2015.

So, are you a Romanian credit institution and are you looking into issuing covered bonds – what should you consider?

You need to ensure that the covered bonds legislation is complied with.

You will need to consider even from this stage the pool of receivables which will be part of the cover pool and which will secure the covered bonds; you will need to check them against the eligibility criteria as well as against the ratios provided by the law.

Also from this stage, you should consider what other entities you should or wish have alongside.

You also need to select a financial auditor to act as asset monitor. Once appointed, they will check your reportings and cover pool and provide their own reports to the National Bank.
Will you put hedgings in place? You will need to select the hedging counterparties.

Will you go public with your covered bonds? You will need to prepare a prospectus.

Once you have all of these in place, you will need to request the approval of the National Bank of Romania for the issuance.

On the bondholder side, you will also need to appoint a representative. In international covered bonds transaction, this would be the trustee. Once the covered bonds are issued, the trustee is already there to protect your interests.

However, under a Romanian law issuance, the representative may be appointed only after the first issuance of covered bonds.

The issuer, the arranger and all the other parties involved will need to consider aligning with the Romanian law the expectations of the bondholders and of the trustee, who are used to rely on various protections under the English law.

We are proud to be part of the teams that finalised this transaction, first of its kind in Romania.

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