Allen & Overy said today that the EUR500 million issuance of covered bonds by Raiffeisenbank a.s., which marks the first public international Czech covered bond issuance, represents a landmark moment for Czech issuers in the international capital markets.

The covered bonds are issued under the bank’s EUR5 billion covered bond programme, established in 2012, and listed on the Luxembourg Stock Exchange.
 
Prague-based partner Václav Valvoda commented: "In accessing euro liquidity through a previously untapped market, Raiffeisenbank has set a benchmark which will undoubtedly lead the way for further public international issuances of covered bonds by Czech banks in the future."
 
Czech banks have been able to issue covered bonds under domestic law in Czech koruna since the early 1990s.  In August 2012, the Czech Bond Act was amended, enabling Czech banks to issue euro-denominated covered bonds under English law.  Raiffeisenbank was the first Czech bank to issue international covered bonds under its programme in 2012; these covered bonds were retained and used as collateral for transactions with the European Central Bank and the European Investment Bank.
 
Allen & Overy advised Barclays Bank PLC, BNP Paribas and Raiffeisen Bank International AG as joint arrangers and lead managers. Partners Sally Onions and Václav Valvoda led the Allen & Overy team from London and Prague, with support from senior associate Petr Vybíral and associate Charles Toland.
 
Jan Pudil, Member of the Board of Directors at Raiffeisenbank, said: "Issuing international covered bonds is a way of obtaining cheaper resources for expansion than on the Czech market, and in a volume we would otherwise not have been able to get.  This is excellent timing for issuing mortgage-backed bonds in euros.  Several weeks ago the ECB, as part of its new quantitative easing programme, announced the details of the Covered Bond Purchase Programme 3 (CBPP3).  Even though Raiffeisenbank’s covered bonds are not eligible for the CBPP3, the issuance benefited from it, the interest rate the issuer pays to investors has fallen.  The ECB’s programme covers only issuers in the euro zone, but we can profit from it as well."