Clifford Chance Badea, the local office of global law firm Clifford Chance, has advised Alpha Bank România in relation to the first covered bond programme established in Romania, for the amount of EUR 1 billion. The program comes three years after the Romanian covered bond law entered into force, as a result of several years of consultations and intense work between authorities and banks assisted by Clifford Chance Badea lawyers.
The legal team advising Alpha Bank is part of the Capital Markets practice coordinated by Mădălina Rachieru, Partner, and included Radu Ropotă (counsel), Georgiana Evi (associate) and Yolanda Ghiță-Blujdescu (associate).
The Clifford Chance team has advised the bank throughout the entire process, starting with legal assistance in the preparation and finalisation of the prospectus, negotiation of documentation related to the bonds programme, approval of the prospectus by the Commission de Surveillance du Secteur Financier (CSSF) and preparation of the listing process on the Luxembourg and the Bucharest Stock Exchanges.
"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," Mădălina Rachieru underlined. "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 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 type of financial instruments as collateral for obtaining financing from central banks (for investors).
"This transaction enriches the Romanian capital market with a new financial instrument allowing credit institutions to attract liquidities based on their credits portfolio. It represents the result of the collective effort of putting into practice the legislation prepared together with the Romanian Association of Banks and the National Bank of Romania. This effort has seen its challenges, given the complexity of the transaction, which included the alignment of all contractual mechanisms so that prerogatives of all parties involved may still apply – the issuer, the asset monitor, the covered bondholders representative," Radu Ropota added.
"Another challenge in implementing the transaction was related to aligning the legal frame applicable in Romania to international market standards governing the covered bonds issues and the capital market in general," Georgiana Evi said.