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Alpha Bank Romania launches €1,000,000,000 Global Covered Bond Programme

Alpha Bank Romania has finalised the establishment of its Euro 1 billion Global Covered Bond (the “Programme”). It is the first covered bond Programme established in Romania. The first issuance of Euro 200 million is scheduled in the near future, a press release informs.

Sergiu Oprescu, Executive President of Alpha Bank Romania said “We have the pleasure to announce the launch of the first covered bond Programme in Romania, an initiative that continues our pioneering tradition in banking, after the launch in 2001 of the first mortgage loan. Through this Programme, Romania will be among the countries that have both a modern legislation and an active covered bond market.”

The project is being carried out in collaboration with Barclays Bank PLC who acted as Arranger, PwC as Asset Monitor, Allen & Overy London and RTPR Allen & Overy as Arranger’s Counsels, and Clifford Chance Badea and Clifford Chance London as Issuer’s Counsels. Alpha Bank Romania intends to list the covered bonds issued under the Programme both on the Luxembourg and Bucharest Stock Exchanges. On April 10th, Moody’s Investors Service (“Moody’s”) has assigned a provisional (P)Baa2 long-term rating to the mortgage covered bonds to be issued by Alpha Bank Romania S.A. Moody’s issues provisional ratings in advance of the final sale of securities as a  preliminary opinion. Upon a conclusive review of the transaction and associated documentation Moody’s will endeavour to assign a definitive rating to the covered bonds.

“We are honoured to continue our tradition of contributors to the introduction of new Capital Markets tools in Romania. After working on the first GDR issue in Romania (at the Romgaz IPO), we now had the opportunity to contribute to the first covered bond programme in Romania. It has been a great pleasure working with the Alpha Bank team, who has thus ‘launched’ the covered bonds market in Romania. We thank them for their trust and involvement into such an extremely sophisticated, intense project, which raised multiple legal challenges that made us look for innovative solutions,” stated Mădălina Rachieru, Partner, Clifford Chance Badea, Head of the Bucharest Capital Markets Practice. “It is also a great satisfaction that our involvement in drafting the covered bonds law, alongside the Romanian Association of Banks and the National Bank of Romania, has finally materialized into such a programme on the Romanian market.”

Covered bonds are a common financing solution in international financial markets, whereby the issuing bank aims to diversify its funding sources and lower their average cost, attracting new funds for the development and expansion of its activities. At European Union level, about 27% of mortgages from financial institutions are funded by covered bonds, a frequently used solution by all banking systems in Europe.

The covered bonds issued under the Programme will be guaranteed, according to Law no. 304/2015, with claims arising from mortgage/real estate investment contracts in progress, but the covered bond issue does not imply any change in the previously agreed terms of the contract with the Bank’s Customers or credit-related collateral.

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