Moody’s Investors Service sees “encouraging” signs for the emergence of a New Zealand covered bond market following a proposal from regulators for a comprehensive legal framework and the first-time issuance this year of this product.

This past October, the Reserve Bank of New Zealand (RBNZ) issued a regulatory framework to foster covered bond issuance, which in Moody’s view “will provide more certainty and help mitigate the primary risks [the agency] would take into account in [its] rating process.” The agency said the broad scope of the proposed legislation could be a credit strength as well, as it might be telegraphing the instrument’s systemic importance. 

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