UCITS regime to be amended for EU fixed income products

The European Commission (the “Commission”) has published two legislative proposals for the establishment, at EU level, of enabling frameworks for sovereign bond-backed securities (“SBBSs”) and covered bonds (“CBs”).

Both proposals incorporate amendments to the provisions of the UCITS regime governing investment in these asset classes. For CBs, it is proposed to remove the current provision (Article 52(4) of the UCITS Directive) and replace it with a reference to CBs as defined under the Commission’s proposal, while the draft framework for SBBSs proposes permitting UCITS to invest in these securities on a look-through basis i.e. as though they were sovereign bonds.


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