News

Czech bank issues first international covered bond programme

Allen & Overy advised joint arrangers and lead managers Barclays Bank PLC, BNP Paribas and Raiffeisen Bank International AG on a EUR5 billion covered bond programme and on the first covered bond issuance by Raiffeisenbank a.s. under this programme. This is the first international Czech covered bond issuance.

Czech banks have been able to issue covered bonds under domestic law in Czech koruna since the early 1990s. In August this year, the Czech Bond Act was amended, enabling Czech banks to issue euro denominated bonds under English law. This format is likely to attract more international investors and similar covered bonds might become eligible collateral for transactions with the European Central Bank (ECB) within the European banking system. The bonds are listed on the Luxembourg Stock Exchange.  The ECB is yet to confirm the covered bonds as eligible collateral. 

Partners Sally Onions and Václav Valvoda led on the deal, assisted by associates Emily Love and Petr Vybíral.

Partner Václav Valvoda commented: "I was very pleased that we had the opportunity to provide advice on this landmark deal. This is good news for the Czech market, which is now able to issue covered bonds that are more attractive to foreign investors."

Partner Sally Onions added: "Raiffeisenbank is the first Czech bank to take advantage of this legislative change. This development gives Czech issuers the ability to access liquidity through a previously untapped market."

Jan Pudil, Executive Director of Treasury, Investment Banking and Financial Institutions at Raiffeisenbank a.s. said: "The key factor for our meeting the ECB criteria was our ability to issue and primarily settle the covered bonds directly in the Eurozone, which was not allowed by the Czech Bond Act until this summer. In addition to the ability to use the covered bonds as collateral for transactions with the ECB - which I hope the ECB will confirm soon - our mid-term goal is to use the programme to directly sell the first issuesof covered bonds to investors on the Eurobond market."