Investors will now have an easier time comparing covered bonds from different jurisdictions, under a single transparency template proposed by the European Covered Bond Council.
The ECBC, together with its Covered Bond Label Foundation, announced this week a “Common Harmonized Template” that will apply across jurisdictions for all covered bond issuers, which hold the Covered Bond Label.
Launched in mid-2012, the the ECBC's Covered Bond Label highlights the value and quality of covered bonds. As of June 2015, there are 13 national transparency templates , 73 issuer profiles and information on 85 labeled cover pools.
A harmonized template allows investors to compare a data across countries to gain a comprehensive view on cover assets, liabilities and legislative frameworks across markets, according to an ECBC press release.
It addresses both the Europe Commission’s Capital Markets Union initiative’s call for an increased level of harmonization in the covered bond space; and investors need for updated, comprehensive and readily comparable information in order to make informed investment decisions, including consistent data on the composition and quality of the cover pool.
“After years of intense and constructive dialogue between issuers and investors, the Common Harmonized Transparency Template represents a welcome and significant step forward, which will facilitate data comparability and investors’ due diligence, thereby contributing to building the Capital Markets Union,” said Andreas Denger, a portfolio manager at MEAG MUNICH ERGO Asset Management in Munich, and chairman of the Covered Bond Investor Council (CBIC), in the ECBC press release.
The template enters into force in the first quarter of 2016. ECBC is giving issuers a one-year phase-in period to align IT systems and disclosure policies to the new format.
The template applies to issuers in the jurisdictions which currently hold Labels (Austria, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom) and issuers applying for the Covered Bond Label in 2016.
Issuers outside of the European Economic Area (EEA) are currently working on the basis of the harmonized template; and it is expected that the first non-EEA Label applications will be made towards the end of 2015 and the start of 2016, according to the ECBC.