CBE tightens rules on banks’ corporate and securitization bond investments

The CBE is tightening the rules on bank investments in corporate and securitization bonds circular (pdf)

One borrower, one number

The new rules turn bond holdings into a concentration-risk exercise.

Bond books can no longer sit apart from lending exposure.

Credit quality gets a floor — and a price.

The homework gets heavier.

FRA clearance stays mandatory.

Consumer and real estate paper face extra tests.

No guaranteeing and holding the same issuance.

IN CONTEXT- barred banks from granting or renewing credit facilities tightening the screws on NBFI

OUR TAKE- The move appears to be aimed at ensuring that regulation keeps pace with the rapid expansion of the debt capital market

The more interesting question may be what this does to issuance, not just holdings.

IN OTHER REGULATION UPDATES

The FRA is giving life ins. and capital-formation companies a faster lane for issuing and renewing group ins. contracts statement

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