The ICMA Covered Bond Investor Council (CBIC) has called for greater take-up of the Covered Bond Label Harmonised Transparency Template, noting that only 10 issuers active this year are offering one during its phase-in, and for enhanced disclosure in areas such as CPT structures.

The Harmonised Transparency Template (HTT) was introduced at the beginning of the year with a one year phase-in under the Covered Bond Label initiative of the European Covered Bond Council, which is now undertaking a first annual review of the HTT, involving feedback from ECBC members and its advisory council.

In a response to the review released today (Tuesday), the CBIC welcomed the “enormous progress” made to date by the Covered Bond Label Committee on the HTT.

“We view this as a very positive development and a strong response to the call by the CBIC in 2012 for enhancements to covered bond pool transparency,” said Nathalie Aubry-Stacey of the CBIC secretariat at the International Capital Market Association.

However, the CBIC highlighted that of 39 issuers that have had new bonds included in the Label database this year, only 10 offer a HTT on their website. Of 77 issuers providing information on 91 Labelled pools, the CBIC recognised only 22 as having compliant HTTs available – excluding three available only in pdf format, one of which it said could also “not be easily accessed”.

“Therefore, the compliant implementation rate is at around 29% at this stage – nearly halfway through the first implementation year,” said Aubry-Stacey. “Many members of the CBIC have commented on how useful this tool is to them as they undertake due diligence on their covered bond investments and potential future investments.

“Needless to say an increase in the number of templates, issuers and pools covered would significantly enhance the efficacy and credibility of the tool.”

The CBIC said that for the HTT to be of “real value”, all Labelled issuers should have up to date HTTs easily available in pdf format on their websites.

“Some members suggest that concrete deadlines should be set and publicised, and we need some commitment that if they are not met, issuers will not be Covered Bond Label compliant anymore,” it said.

In response, Luca Bertalot, secretary general of the EMF-ECBC, stressed that the HTT is still being phased in but noted that further issuers are expected to take up the template imminently.

“The numbers we are seeing are pretty positive,” he told The CBR. “Most of our members are working on this.

“We appreciate that investors are providing feedback as part of the process,” he added.

The CBIC also called for an expansion of the areas covered by HTTs, including fuller information regarding the terms and conditions of conditional pass-through (CPT) structures, which Aubry-Stacey said are increasingly being scrutinised by investors as their use becomes more widespread.

Contractual terms such as those related to bondholder consent to programme changes should also be included, said the investor body, given that they are not always easily available but are of growing importance. Clearer definitions, enhance information on related counterparties, an audit trail of cover pool changes, and more detail on substitute assets are other areas it requested be enhanced.

The CBIC added that a European Central Bank response to the European Commission’s covered bond harmonisation consultation was widely supported by members.

These topics will be among those discussed at our joint conference with the ICMA CBIC on 9 June in Frankfurt – click below for more info.

http://www.icmagroup.org/events/the-icma-cbic-and-the-covered-bond-report-conference-2016/