Regulatory Alerts2025-07-25
Added · Updated
CSSF Regulation No 25-03 of 25 July 2025 Relating to the Activity of Issuing Covered Bonds
Issuing credit institutions must value physical collateral assets, including immovable and movable property, using prudent methods that exclude speculative elements and fees, with specific rules for renewable energy properties based on Estimated Realisation Value and Fair Value. The regulation mandates independent valuations, annual monitoring and revaluation cycles, and the use of statistical models subject to backtesting and plausibility checks. Derivative contracts may be included in the cover pool only if they hedge interest-rate or foreign-exchange risk, are governed by standardized agreements, and involve counterparties with a low risk of default. Institutions are also required to transmit information on covered bonds and publish data in accordance with the regulation's provisions.