The Bank of England issued a market notice indicating that it plans to move ahead with new disclosure requirements, according to a Reuters report.
The transaction summaries will list all the key features of the offering, such as issues relating to deal structure, asset characteristics, cash flows, credit enhancement and liquidity support features, noteholder voting rights, as well as the relationship between noteholders and other secured creditors in a deal. It should also include the triggers within the transaction and the consequences of these being breached.
For master trusts and covered bonds, the documentation is required to be updated on a regular basis. Additionally, transaction overviews will need to be incorporated into the deal documents by the end of the implementation period so that all existing and new offerings meet the eligibility criteria.
A waterfall cash flow model should be made available to investors, potential investors and certain other market professionals acting on their behalf, by or on behalf of the transaction originator, arranger or cash manager. The cash flow models must also accurately represent how cash is applied through the waterfall given the priority of payments.
Cash flow models may be provided in either a spreadsheet format or on a Web site maintained by or on behalf of the deal's originator or arranger; or in a proprietary format on the platform of a third party provider. Access must be free of charge to users.
The calculations used by the cash flow model should be transparent to the user. The user should also be able to record and retain the results of a cash flow run.