Responding to the Treasury and Financial Services Authority's (FSA) UK Regulated Covered Bond Regime, which came in to effect on 6 March, the Investment Management Association (IMA) has broadly welcomed the regime, which takes investor concerns into account and offers a higher quality regime than previous proposals. 

Jane Lowe, Director of Markets at IMA, said:

"Now that there is a formal UK regime for covered bonds there is more scope for activity in this market. It is likely the new regime will be used initially by bank issuers seeking to transfer existing unregulated covered bonds into the new regulated regime to benefit from improved capital weighting.  But in the longer term, a regulated regime should promote investor confidence and bring more issuance activity."

-Ends-

Notes to Editors

• 1. A covered bond is a class of corporate bond which is usually issued by a bank and backed by assets such as mortgages or public sector loans. The income from the bond and the repayment of principal are secured by "ring fencing" the assets backing the covered bond from the other liabilities of the issuer.
• 2. The new UK Regulated Covered Bond Regime legislative framework uses a principles-based approach and is designed to comply with the requirements of the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive. UCITS funds are permitted to invest in much larger size in a Regulated covered bond than in an unregulated covered bond.

• 3. The IMA is the trade body for the UK's £3,100 billion asset management industry. The money its members manage is in a wide variety of investment vehicles, including authorised investment funds, pension funds and stocks & shares ISAs.

For further information, please contact:
Noreen Shah, Press Officer, IMA, 020 7831 0898    

Out of hours contact:       
Mona Patel, Head of Communications, IMA 07834 089 332