Asset Covered Securities (Amendment) Act 2007

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Amendment of section 47 of Principal Act.

35.— Section 47 of the Principal Act is amended—

(a) in subsection (5)(a), by substituting “comprised” for “included”,

(b) in subsection (8)—

(i) in paragraph (d), by substituting “comprised” for “included”, and

(ii) by inserting “(but, for the purposes of this subsection, disregarding the effect of any pool hedge collateral)” after “and those securities”,

(c) by substituting the following for subsection (9):

“(9) For the purposes of subsection (8)(a), ‘duration’, in relation to the cover assets pool or public credit covered securities secured on the pool, means, subject to subsection (9A), a weighted average term to maturity of the relevant principal amount of the public credit assets and substitution assets comprised in the pool or those securities, as the case may be, determined in accordance with a formula or criteria specified in a regulatory notice made for the purposes of this subsection, after taking into account the effect of any relevant cover assets hedge contract entered into by the institution in relation to the pool or those securities, or both, as the case may be.

(9A) For the purposes of the definition of ‘duration’ in subsection (9), the weighted average term to maturity of the principal or nominal amount of the public credit assets and substitution assets comprised in the cover assets pool must not be more than 3 years greater than the weighted average term to maturity of the public credit covered securities secured on that pool after taking into account the effect of any relevant cover assets hedge contract entered into by the institution in relation to the pool or those securities, or both, as the case may be.”,

and

(d) by inserting the following after subsection (10):

“(11) For the purpose of subsection (8)(b), a designated public credit institution is required to maintain a minimum level of regulatory overcollateralisation of its cover assets pool with respect to the public credit covered securities in issue which are secured on the pool.

(12) For the purposes of subsection (11), the Authority may, by regulatory notice notified in Iris Oifigiúil—

(a) specify a formula or criteria—

(i) to determine the present value of—

(I) public credit assets and substitution assets comprised in a cover assets pool, and

(II) public credit covered securities in issue which are secured on that pool,

(ii) that may take account of cover assets hedge contracts relating to those assets or securities, or both,

(b) specify the frequency of any determination by the designated public credit institution of those present values.

(13) Subsection (11) shall not affect any contractual overcollateralisation undertaking made by the institution and which is the subject of the cover-assets monitor’s functions under the Asset Covered Securities Act 2001 (Sections 61(1), 61(2), 61(3)) (Overcollateralisation) Regulations 2002 ( S.I. No. 635 of 2002 ), where that contractual overcollateralisation undertaking requires a higher level of cover assets to be maintained in the cover assets pool than subsection (11).

(14) In this section—

‘ contractual overcollateralisation undertaking ’ means a contractual undertaking by the designated public credit institution that the prudent market value of the cover assets pool is to be maintained by the institution at a specified level greater than the total of the principal amounts of the public credit covered securities in issue which are secured on that pool;

‘regulatory overcollateralisation’ means that the present value of the public credit assets and substitution assets comprised in the cover asset pool, expressed as a percentage of the present value of the public credit covered securities in issue which are secured on that pool, is a minimum of 103 per cent after taking account of the effect of any cover assets hedge contract comprised in the cover assets pool.”.