Covered bonds law puts New Zealand on even footing

The third reading of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill today has been welcomed by the New Zealand Bankers’ Association.

The Bill establishes a legislative framework for issuing covered bonds and enhances the Reserve Bank’s supervision of covered bond programmes.

“The new law brings us into line with other jurisdictions. This Bill clarifies matters for investors and means that New Zealand covered bond issues are no longer at a competitive disadvantage with other countries,” New Zealand Bankers’ Association chief executive Kirk Hope said.

“Covered bonds are a useful funding tool and provide benefits for both investors and the bond issuing banks.

“They extend our banks’ access to cheaper and more stable offshore funding. They also give investors the confidence to continue to provide essential funding to help facilitate our economic growth.

“In turn, consumers benefit from banks’ access to offshore funding to help meet their needs and aspirations,” Hope said.