The Bank of England is to amend the collateral eligibility criteria for regulated covered bonds in the Bank’s Sterling Monetary Framework.
From 1 September, to be eligible as Level B collateral in the Sterling Monetary Framework, the minimum original issue size of a UK, French or German Regulated Covered Bond (RCB) will be lowered to £500 million or €500 million, from £1 billion or €1 billion.
The Bank said the change reflects developments in benchmark issue sizes for regulated covered bonds and takes account of prudential liquidity requirements.
Following this change, RCBs that are already eligible as collateral will be reclassified between Level B and C accordingly and the Bank will contact affected participants separately.
Beyond this change to the issue size criterion, the other eligibility criteria for RCBs to be Level B collateral are unchanged: the RCB must be a UK, French or German RCB and of the highest credit quality (broadly equivalent to AAA); and the underlying assets must be homogenous pools of UK or EEA social housing loans, public sector debt, or prime residential mortgage loans.
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