The European Commission’s proposed Directive to create “EU Covered Bonds” is set to be published on 7 March 2018, DG FISMA’s Didier Millerot told an AFME/vdp conference on Friday, where he gave an update into the development of the framework, including that ship covered bonds will probably remain CRR-eligible.

Millerot, head of unit, banks and financial conglomerates, DG FISMA, said that there is at the political level – at EU institutions and in individual countries – a “very large” consensus on the case for action and that the time has come for the Commission to deliver.

“We are nearly there,” he said.

The Commission has received very clearly the message, “don’t break what works already well”, he added, explaining that – unlike many EU initiatives addressing problems that emerged in the financial crisis – “we are talking here more about an enabling legislation”.

Millerot noted the European Parliament’s parallel and similar work and ideas regarding covered bond harmonisation, saying it had “interesting potential”, but added it is unlikely the Commission will adopt the Parliament’s suggestion to use the terms “Premium Covered Bonds” and “Ordinary Covered Bonds” to denote those that are CRR-eligible and those that only meet the Directive’s requirements, respectively, indicating that the latter could be deemed pejorative.

He said that an “EU Covered Bonds” tag – alongside national denominations – could be used for all covered bonds that meet the Directive’s requirements.

Millerot said the extent to which the Directive would define eligible assets remained to be seen, but he said that ship covered bonds would “probably” remain CRR-eligible – something that had previously been uncertain – and aircraft covered bonds, which are not CRR-eligible, would also likely retain their current status.

The Commission’s proposals are due to be unveiled as part of a big Capital Markets Union (CMU) package on 7 March, Millerot announced, with adoption set for mid-2019 after the requisite legislative procedure and with the Parliament’s current term ending in the second quarter of 2019.