Clifford Chance
Luxembourg opens covered bonds issuances to universal banks and implements covered bonds directive
15 December 2021
The Luxembourg law of 8 December 2021 on the issue of covered bonds (lettres de gage), which implements the EU's Covered Bonds Directive (EU) 2019/2162 into Luxembourg law has recently been published in the Luxembourg Official Journal and will enter into force on 8 July 2022. While the existing framework is already largely in line with the EU Directive, the new law introduces so-called "European" covered bonds along the traditional Luxembourg covered bond types and brings some technical adjustments and clarifications. The new law also abandons the specialization principle under which only covered bond banks with a specialised banking licence were allowed to issue covered bonds in Luxembourg, thereby opening new refinancing opportunities to universal banks in Luxembourg.
Clifford Chance has prepared a client briefing providing an overview of the main novelties brought by this new law and further exploring the opportunities for universal banks to issue covered bonds.
