21.07.2020

Guaranteed Bonds Dictionary (Jargon)

This Jargon Dictionary of Collateralised Bonds is a section of a financial regulatory dictionary. And it has a specific regulation. The language of the financial regulatory field is complex and an entry barrier to understanding its regulation. This work is informative and lacking in scientific character. It is only an approach that facilitates access to a complex subject. This same work and this particular section are available in Spanish.

Por Sanz González , María

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Concept	Definition
AUTOMATIC ACCELERATION	A situation in which a covered bond automatically becomes immediately due and payable upon the insolvency or resolution of the issuer and in respect of which the covered bond investors have an enforceable claim for repayment at a time earlier than the original maturity date
COVER ASSETS	Assets included in a cover pool
COLLATERAL ASSETS	Physical assets and assets in the form of exposures that secure cover assets
SUBSTITUTION ASSETS	Cover assets that contribute to the coverage requirements, other than primary assets
PRIMARY ASSETS	Dominant cover assets that determine the nature of the cover pool
SPECIAL ADMINISTRATOR	The person or entity appointed to administrate a covered bond programme in the event of the insolvency of a credit institution issuing covered bonds under that programme, or when such credit institution has been determined to be failing or likely to fail pursuant to Article 32(1) of Directive 2014/59/EU or, in exceptional circumstances, where the relevant competent authority determines that the proper functioning of that credit institution is seriously at risk;
COVERED BOND	A debt obligation that is issued by a credit institution in accordance with the provisions of national law transposing the mandatory requirements of this Directive and that is secured by cover assets to which covered bond investors have direct recourse as preferred creditors
COVER POOL	A clearly defined set of assets securing the payment obligations attached to covered bonds that are segregated from other assets held by the credit institution issuing the covered bonds;
PUBLIC UNDERTAKINGS	Any undertaking over which the public authorities may exercise directly or indirectly a dominant influence by virtue of their ownership of it, their financial participation therein, or the rules which govern it
CREDIT INSTITUTION	An undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account
SPECIALISED MORTGAGE CREDIT INSTITUTION	A credit institution which funds loans solely or mainly through the issue of covered bonds, which is permitted by law only to carry out mortgage and public sector lending and which is not permitted to take deposits, but which takes other repayable funds from the public
EXTENDABLE MATURITY STRUCTURE	A mechanism which provides for the possibility of extending the scheduled maturity of covered bonds for a pre-determined period of time and in the event that a specific trigger occurs
GROUP	1. A group of undertakings of which at least one is an institution and which consists of a parent undertaking and its subsidiaries, or of undertakings that are related to each other as set out in Article 22 of Directive 2013/34/EU of the European Parliament and of the Council 2.In relation to an investment firm, the group of which that firm forms a part, consisting of a parent undertaking, its subsidiaries and the entities in which the parent undertaking or its subsidiaries hold a participation, as well as undertakings linked to each other by a relationship within the meaning of Article 12(1) of Council Directive 83/349/EEC on consolidated accounts
COVERED BOND PROGRAMME	The structural features of a covered bonds issue that are determined by statutory rules and by contractual terms and conditions, in accordance with the permission granted to the credit institution issuing the covered bonds;
MATCH FUNDING REQUIREMENTS	Rules requiring that the cash flows between liabilities and assets falling due be matched by ensuring in contractual terms and conditions that payments from borrowers and counterparties of derivative contracts fall due before payments are made to covered bond investors and to the counterparties of derivative contracts, that the amounts received are at least equal in value to the payments to be made to covered bond investors and to counterparties of derivative contracts, and that the amounts received from borrowers and counterparties of derivative contracts are included in the cover pool in accordance with Article 16(3) of Directive 2019/2162 until the payments become due to the covered bond investors and counterparties of derivative contracts
NET LIQUIDITY OUTFLOW	All payment outflows falling due on one day, including principal and interest payments and payments under derivative contracts of the covered bond programme, net of all payment inflows falling due on the same day for claims related to the cover assets
SEGREGATION	The actions performed by a credit institution issuing covered bonds to identify cover assets and put them legally beyond the reach of creditors other than covered bond investors and counterparties of derivative contracts
OVERCOLLATERALISATION	The entirety of the statutory, contractual or voluntary level of collateral that exceeds the coverage requirement set out in Article 15 of Directive 2019/2162
COVERED BOND PUBLIC SUPERVISION	The supervision of covered bond programmes ensuring compliance with, and the enforcement of, the requirements applicable to the issue of covered bonds
MARKET VALUE	For the purposes of immovable property, the estimated amount for which the property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion
MORTGAGE LENDING VALUE	the value of immovable property as determined by a prudent assessment of the future marketability of the property taking into account long-term sustainable aspects of the property, the normal and local market conditions, the current use and alternative appropriate uses of the property