Debt securities of Austrian issuers – covered bonds

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Description:

Pfandbriefe and covered bonds are debentures issued under a special legal framework and securitised by their own cover pool.

In Austria, they are provided with the following statutory security features that offer investors a high degree of protection and transparency:

Separate legislative basis for Pfandbriefe and covered bonds

  • Mortgage Bank Act (Hypothekenbankengesetz, HypBG) since 1899 and 1938
  • Pfandbrief Act (Pfandbriefgesetz, PfandbriefG) since 1927 and 1938
  • 1905 Act on Covered Bond Issuance (Gesetz von 1905 betreffend fundierte Bankschuldverschreibungen, FBschVG)

The bond issuers maintain their own cover pool to securitise the Pfandbrief or the covered bond on their balance sheets

  • Eligible claims for the cover pool are mortgage claims or local community claims
  • In the event of insolvency the cover pool is administered separately from the issuer’s remaining assets and serves first of all to service the claims of Pfandbrief and covered bond creditors
  • For claims going beyond the asset cover, the issuer is additionally liable with all its assets (on an equal footing with non-securitised creditors)
  • Minimum surplus cover of the asset cover is stipulated by law
  • Regular review of the cover pool by government-appointed trustees or government commissioners

The issuers have a banking licence and are subject to the Austrian banking regulator

  • Austrian mortgage bonds (Pfandbriefe) and covered bonds comply with the criteria set out in Article 52 (4) of the UCITS Directive (2009/65/EC) and are trustee securities within the meaning of Article 217 of the Austrian Civil Code (ABGB).

Austrian Pfandbriefe and covered bonds look back on a first-rate credit history: since the legislative basis came into force, there has never been a default.

They are an essential source of refinancing for banks and an interesting investment for investors, combining return on investment and security. Their importance for financial markets, in particular in a financial crisis, was underscored by the EUR 60 billion covered bond buy-up programme introduced by the ECB in 2009.

Classification of underlying takes place due to the data field ’Garantie-/Deckungskennzeichen’.

Source:

OeNB.

Legal basis:

Article 44 Nationalbank Act, ECB guideline.

Methodology:

Monthly census.

Reporting institutions:

Banks, Austrian Federal Financing Agency.
Securities identification information is derived from the securities database of the OeNB’s Section Statistics.

Index:

Issuance statistics, debt security, securities issues, gross issues, net issues, redemptions