Royal Decree-Law 24/2021 of 2 November on the transposition of European Union directives in the area of covered bonds

Royal Decree-Law 24/2021 (BOE 03.11.2021) in line with the most recent legislative policy, brings together heterogeneous legislative amendments, bordering on the limits of the legislative competence delegated to the executive branch. One of the novelties it incorporates is the transposition into national law of Directive 2019/2162 on the issuance and public supervision of covered bonds.

Covered bonds are securities which, without prejudice to the latter’s asset liability, establish a legally enforceable right in rem on all assets that the issuing entity assigns to a special covering pool without the need for registration in public registers or any other legal formality, which has resonances of special-purpose assets (Sondervermögen), which have no special legal personality (Law 41/2003).  Although they must be subject to a formal classification (covered bonds (cédulas hipotecarias, cédulas territoriales, cédulas de internacionalización, bonos hipotecarios, etc.) in reality the legal configuration is available, provided that the issuing institution complies with the legal requirements on the guarantee to this liability instrument.

Such a cover pool, which has the character of a special collateral pool, shall consist of assets – including financial derivatives – clearly defined and segregated from the rest. For this purpose, the issuing institution must have a special up-to-date register in which all details of the bond issue and all assets attached to the cover pool are recorded. The assets must be valued and appraised prior to their inclusion in the cover pool. The issuing entity will also have to designate a supervisory body over the cover pool, which will act at all times in the interest of investors. Likewise, the Banco de España will supervise compliance with the applicable legal regulations.

Accordingly, the holders of the covered bonds will have the status of creditors with special preference in third party claims (articles 1922.8 and 1923.6 of the Civil Code) and of special privileged creditors in insolvency proceedings (article 270.7 of the Consolidated Text of the Insolvency Act). Moreover, in the event of insolvency of the issuing entity, the assets comprising a cover pool, in line with their nature as special guarantee assets, will be segregated from the rest of the entity’s assets and will form a separate asset without legal personality, which will operate represented by the special administrator.

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