EBRD boosts covered bond market in Slovak Republic

4 October 2018

By Axel Reiserer

  • EBRD invests in covered bonds by local lender Slovenská sporiteľňa
  • EBRD supports drafting of new legislation for bonds in cooperation with Slovak authorities
  • Rating agency Moody’s rates programme Aaa


The development of the capital market in the Slovak Republic is taking another step forward. Following a successful joint programme to develop the legal framework for bonds, the EBRD has now invested €40 million under the EBRD Slovak Covered Bonds Framework in the first triple-A-rated covered bonds issued by the local lender Slovenská sporiteľňa.

The EBRD worked with the Slovak Ministry of Finance and the country’s central bank on the covered bonds reform. The instrument is a long-term funding tool backed by assets on the issuing banks’ balance sheets such as mortgages. They are viewed as low-risk investments and are a well-established instrument in Western markets.

The Slovak Republic became one of the EBRD countries of operations benefiting from an EBRD policy dialogue initiative which focused on the development of national legislation on covered bonds, helping to create the legal foundations for covered bonds with the adoption of a framework that entered into force on 1 January 2018. The law was drafted following a technical cooperation project between the Ministry of Finance of the Slovak Republic and the EBRD and also takes on board best practice recommendations by the European Banking Authority.

The Moody’s credit opinion about the Slovenská sporiteľňa covered bonds rates the instrument Aaa and states: “Credit strengths include the covered bonds’ full recourse to the issuer, the support provided by the Slovak legal framework for covered bonds, which provides for the issuer’s regulation and supervision, and the high credit quality of the cover pool.”

The development of local capital markets is one of the EBRD’s priorities to strengthen the resilience of the economies where the Bank invests. The EBRD’s approach combines investment with technical assistance through policy engagement, for instance in the drafting of laws. In the Slovak Republic alone the EBRD has invested €2.4 billion in more than 130 projects to date.

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