The Covered Bond Label Foundation unveiled a 2017 version of its Harmonised Transparency Template (HTT) yesterday (Thursday), with minor updates aimed at making the template easier to use, according to the ECBC’s Luca Bertalot, while issuers that fail to comply could potentially lose their Label.

The HTT was introduced at the start of the year, but with a one year phase-in for issuers adhering to the Covered Bond Label.

The Covered Bond Label Foundation – an initiative of the European Mortgage Federation-European Covered Bond Council (EMF-ECBC) – yesterday announced that the new HTT had been formally approved at a meeting of the Covered Bond Label committee in Düsseldorf earlier this month.

“The enhanced version of the HTT sends two important messages,” said Bertalot, secretary general of the EMF-ECBC. “Firstly, that market-led initiatives can play an important role in concretely enhancing transparency in the covered bond space; and secondly, that when required by market participants, the Covered Bond Label is able to refine, on a regular basis, its quality standards in order to meet the latest needs and expectations of issuers, regulators and investors.

“In doing so, the Covered Bond Label represents a dynamic qualitative benchmark for the market.”

He told The Covered Bond Report that the update mainly involves minor improvements to the formatting and phrasing of certain aspects of the template.

“For example, sometimes wording was unclear, or in some cases links did not direct to the right place,” he said. “So we have made the HTT more readable for investors and easier for issuers to implement.”

Other changes include an update that means issuers are unable to delete cells or columns when filling in the template, and the addition of certain currencies, Bertalot added.

“We have effectively filled the gaps that investors and issuers have found,” he said.

The new version of the HTT will be applicable to all issuers adhering to the Label as of the end of the first quarter of 2017. Bertalot said that if an issuer fails to fully implement the HTT after the phase-in period, the situation will be assessed by a withdrawal panel formed of the Label Committee.

“In that case, if the issuer continues to be non-compliant, their Label will be withdrawn,” he said.

Speaking at an ECBC plenary on 14 September, Andreas Denger, ICMA Covered Bond Investor Council (CBIC) chairman and senior portfolio manager and analyst at MEAG, said it is important that transparency be harmonised across the covered bond market, and cited the HTT as being an important step towards this.

“The amount of issuers that have agreed to report according to the HTT is quite good,” he said. “However, as an investor I need to see what the coverage is in terms of issuers who are willing to report to this kind of standard.

“And there, we are only at around 50%-55%, so there is a long way to go, even if you take only the eligible countries into account.”

Denger added that the CBIC would be asking its members to be more active in requesting that issuers use the HTT.