The Austrian Covered Bond

One uniform legal basis

Sice July 8 th 2022, Austrian Covered Bonds are issued based on a single uniform law:

• Pfandbrief Act (PfandBG) since 2022
  Legislative text (German only)
  

The three previously existing laws (HypBG, PfandbriefG, FBSchVG) therefore expired as of July 7 th , 2022.

The harmonised Pfandbrief Act (PfandBG) meets the high standards of the EU Covered Bonds Directive (Directive (EU) 2019/2162) for Covered Bonds:

• Issuers hold separate cover pools as collateral for Covered Bonds.
• Eligible primary cover assets are risk positions vis-à-vis public-sector entities as well as mortgage or commercial debt – substitute assets must meet strict criteria and there amount is limited (Definition of eligible cover assets based on Article 129 (1) of the CRR regulation (Regulation (EU) No 575/2013))
• In the case of insolvency, the cover pool is administered separately from the remaining assets of the issuer and primarily serves to service the claims of the Covered Bond creditors.
• For claims beyond the cover pool, the issuer is additionally held liable with its other assets (ranking pari passu with unsecured creditors).
• A legally standardized minimum over-collateralization of the cover pool must be maintained (2%).
• Regular review of the cover pool by an internal or external monitor in addition to supervision by the Financial Markets Supervision (FMA)
• Obligatory maintenance of a liquidity buffer in order to cover the program’s net liquidity outflows for the next 180 calendar days.
• Uniform structure for the issuance of Covered Bonds with a singular maturity extension (soft bullet) of up to twelve months