Keenly-awaited changes to haircuts applied to retained soft bullet and conditional pass-through (CPT) covered bonds will not be unveiled before the end of the year, as had been originally scheduled, and will instead be announced in 2018, an ECB spokesperson told The CBR.

The European Central Bank said in November 2016 that its governing council had decided to adjust the risk control measures for retained covered bonds with extendible maturities in its collateral framework to take into account the perceived “additional risk” of such structures. The ECB said that the measure would enter force at a date to be announced in the second half of 2017.

However, an ECB spokesperson told The CBR today (Friday) that the changes “will come at some point next year”. He declined to comment on the reason for the delay.

The ECB did yesterday (Thursday) announce changes to the treatment of certain bail-inable senior bonds in its collateral framework.

The decision on extendible maturity covered bonds has been keenly awaited by market participants and analysts, who have mulled the impact of such changes on the attractiveness of soft bullet and CPT structures to issuers and whether they could encourage more public covered bond issuance.

Last month the ECB announced that the CPTs of sub-investment grade issuers would be ineligible for its covered bond purchase programme, as of 1 February, and some market participants have questioned the thinking behind some regulatory authorities’ discrimination against extendible maturity covered bonds.

Photo: ECB/Twitter