A first Brazilian covered bond could be launched in the first half of 2017, according to Filipe Pontual of ABECIP, after the expected completion of secondary legislation by August and an improvement in the country’s macroeconomic environment.

A legal framework for Brazilian covered bonds, to be called letras imobiliárias garantidas (LIGs), became law in January 2015, and more detailed secondary legislation has since then been awaited to establish how the Brazilian product will work. The task of defining these features was delegated to the Monetary National Council, which comprises Brazil’s central bank, the minister of finance and the minister of planning, budget and management.

Speaking at a European Covered Bond Council plenary in Copenhagen on Thursday, Filipe Pontual, managing director of the Brazilian Association of Real Estate Loans & Savings Companies (ABECIP), said the central bank is now in the final stages of its discussions with market stakeholders.

“We believe in the next two months we will have this final conversation with the central bank and in July or August we will have the official rules, the last necessary rules, in place,” he said.

Pontual added that the central bank has studied both established covered bond markets and developments in other emerging covered bond markets, such as Singapore and Turkey.

He said that for the first issuance to take place, bank systems and fiduciary agent systems must be established, and noted that a better political and macroeconomic environment in Brazil would be required – but said this environment is expected to improve in the second half of 2016.

“So we see the first issuance probably sometime next year, hopefully in the first half of next year,” he said, “when we will have both the systems within banks, and a better macroeconomic environment.”