CLIFFORD CHANCE BADEA: The new Covered Bonds Law – a financing alternative for credit institutions in Romania

Covered bonds bring several benefits for both issuers and investors – the possibility of obtaining high credit rankings and ensuring access to a large pool of potential investors (from the issuers’ point of view), more accessible investment thresholds, favourable regulatory capital treatment for credit institutions and the possibility to use this financial instrument as collateral for obtaining financing from central banks (for investors).

The law on covered bonds came into effect on March 3, 2016, and is the result of several years of consultations and intense work between authorities and banks assisted by Clifford Chance Badea lawyers.

CLIFFORD CHANCE BADEA has recently organized a seminar about the new legislative framework on covered bonds, which gathered more than 40 officials from the Romanian banking industry, international financial institutions and covered bonds specialists with global experience. Discussions at the event focused on the preparation phase of the covered bonds issuing process, so as to identify potential challenges and solutions, as well as a set of best practices, while also taking into consideration the current market context, in view of the recently adopted giving in payment law.

“The Covered bonds Law replaces the older legal framework (Law no. 32/2006 on mortgage bonds),” said Mădălina Rachieru, Partner CLIFFORD CHANCE BADEA and Head of the Capital Markets practice. “It aligns the current Romanian legislation to the European standards and practices, ensuring a legislative framework that provides increased protection to investors and, at the same time, represents the basis for obtaining alternative and accessible refinancing sources for Romanian credit institutions. Its positive impact can also be transferred to banks’ individual clients, through lower costs in mortgage loans.”

Radu Ropotă, Senior Associate CLIFFORD CHANCE BADEA, who has been actively involved in the consultation and drafting process for the new legislation, added: “It has been an intense process for us, as we tried to align the various points of view from credit institutions and regulatory authorities so as to create the legal framework that will enable the first covered bonds issues on the local market. It has been a concentrated effort alongside the Romanian Banking Association, with the full support of the Romanian National Bank and the Financial Supervisory Authority. The result is a law that, while yet perfectible, reflects this alignment process and existing models that have been successfully tested at international level. We hope to soon witness the first such initiatives under the newly created covered bonds legislative framework”.

The Capital Markets team within the Bucharest office is fully integrated in the global Clifford Chance network. Coordinated by Mădălina Rachieru, the team provides legal assistance to shares and bonds issuers, as well as syndicates of arrangers in Capital Markets transactions. Its most recent portfolio includes, among others, milestone moments for the Romanian Capital Market, such as:
– The dual listings at the Bucharest and London stock exchanges of Romgaz (October 2013, a transaction valued at 386 million Euro), and Electrica (June 2014, 444 million Euro);
– The secondary listing of Fondul Proprietatea at the London Stock Exchange (April 2015);
– Legal assistance to syndicates of arrangers in Romania’s global Medium Term Notes Program since its launch in 2011, a program currently extended to 20 billion Euro;
– Transelectrica’s bonds issue, a 200-million RON transaction (January 2014);
– UniCredit’s domestic 550-million RON bonds issue (June 2013);
– The launch by Erste Group of 660 million Euro share sale (July 2013).


Clifford Chance has been present in Romania since 2006 and operates now as CLIFFORD CHANCE BADEA. The Bucharest office is frequently involved in complex transactions such as syndicated loans, project finance, restructurings, Eurobonds and shares issues on international capital markets, derivatives, companies’ acquisitions by strategic investors or private equity funds, infrastructure and motorway projects, real estate investments etc., as well as domestic and international litigation and arbitration.

In the most recent editions of Legal500, Chambers Global and IFLR1000, CLIFFORD CHANCE BADEA ranks first (Tier 1) among law firms in Romania under the section of Banking & Finance and Capital Markets. It also has a strong Corporate and M&A practice, ranked Tier 1 by IFLR1000 Financial & Corporate 2015-2016, and Tier 2 by Legal 500 and Chambers Global. IFLR1000 also ranks the law firm as Tier 1 for Project Finance and has twice in a row awarded CLIFFORD CHANCE BADEA with the National Law Firm of the Year in Romania Award at the IFLR’s Europe Awards, in 2014 and 2015.

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