Application criteria for acceptance of Covered Bonds in Reserve Bank Domestic Markets' operations

Thank you for your interest in the Reserve Bank of New Zealand accepting your issuance as security in its Domestic Markets' operations. Please provide the information noted below and attest to the following statements:


  • Background on the issuer (including all ratings);
  • Details of the issue, as per an Issue Notice, Prospectus and/or Information Memorandum. This should include:
    • Full legal name of Issuer;
    • Physical and postal address;
    • Description;
    • Issue size;
    • Pricing convention (full details);
    • Currency;
    • Trustee;
    • Asset monitor;
    • Arranger;
    • Dealers;
    • Registrar;
    • Paying agent;
    • Term;
    • Clearing system;
    • Governing law;
    • Redemption;
    • Payments and record date; and
    • Listing (Stock exchange if any).


Confirm that the issue meets the following criteria:

  • Issues have a long term AAA rating from at least two acceptable rating agencies – where there are more than two agencies rating the issue, at least two agencies must rate the issue as AAA, and no rating be lower than AA+.
  • The issuer has a credit rating from at least two acceptable rating agencies.
  • The asset pool consists of New Zealand originated first registered mortgages on New Zealand residential properties.
  • The mortgages which exist as security for the bond are owned by a special purpose vehicle (SPV) that is bankruptcy remote from the originator.
  • The loan to value ratio for each individual mortgage does not exceed 80%. Mortgages with loan to value ratios that exceed the 80% level will be removed from the cover pool and replaced with qualifying mortgages.
  • For all loans included in the pool the originator has, prior to loan approval and as part of the loan origination and approval process, documented, assessed and verified the ability of the borrower to meet their repayment obligations.
  • Only loans that are performing have been included in the pool (Non-performing loans are those that are 90 days or more past due).
  • "Asset monitors" independent from the trustee and the originator will verify calculations relating to asset coverage tests and any other key ratios and provide these, and any other relevant reports, to the RBNZ on a regular basis.
  • Covered bond pricing will be available on at least 80% of days via the NZFMA's NZ Credit Market Daily Pricing Service. Pricing will be available at all month ends.
  • Issues pricing convention follows price and yield formulae as used by the Reserve Bank. The formulae can be found in the Appendices of the Operating rules and guidelines (PDF 132KB).
  • Issues are denominated in New Zealand dollars.
  • Covered bonds are lodged and settled in NZClear. Eligibility criteria for lodgement into NZClear include having a suitable registrar, and paying agent (not Reserve Bank).

Other Considerations

  • Covered bonds are repo eligible on a two name basis only.
  • The Reserve Bank will apply the fixed haircut (as specified on the Eligible securities and haircuts page) to the market value of the securities delivered to the Bank as collateral.
  • As is usual for securities in NZClear, only NZClear members who have a valid resident withholding tax certificate are allowed to hold these securities in the NZClear depository.

The Reserve Bank reserves the right to refuse an application for any reason and is not required to disclose such reasons. In particular, it should be noted that if the credit rating of the issue falls below the Reserve Bank's threshold, then the issue will cease to be eligible in the Reserve Banks' operations.

The above information must be signed by authorised signatories of the Issuer. The Reserve Bank will require a list of authorised signatories for the Issuer and evidence satisfactory in form and substance to the Reserve Bank of the authority of the authorised signatories of the Issuer to execute this Agreement, any other notice or communication issued in respect of this Agreement on behalf of the Issuer, as well as to make the representations on behalf of the applicant required in the attestation.

Please email applications to [email protected].