Debt market round up: UK joins the Ucits party

The UK Treasury has presented its proposals for a covered bonds legislative framework. The UK’s unregulated, structured covered bond market is the largest in the world of its type but suffers alongside regulated markets such as those in Spain and France through not being compliant with the Ucits directive. The new proposals, when implemented, will do away with this disparity, halving the risk weighting of UK covered bonds to 5%.

There now follows a three-month consultation period, after which the Treasury will present the final regulations to parliament, in time for implementation of the new regime on January 1 2008. The regulated covered bonds will be known imaginatively as UK recognized covered bonds.