Covered bonds

The Reserve Bank of New Zealand Act 1989 (Act) sets out a number of requirements relating to covered bonds issued or guaranteed by New Zealand registered banks. A covered bond is a debt instrument issued by a bank that is secured by a specific pool of assets (cover pool). The cover pool assets are owned by a separate company, called a special purpose vehicle (SPV).

Read the Q&A for responses to frequently asked questions about covered bonds.

Requirements for registering covered bond programmes

The Act requires the registration of covered bond programmes and, following a 9 month transition period from commencement of the law on 10 December 2013, registered banks may only issue covered bonds under a registered covered bond programme. In order to be registered by the Reserve Bank, banks' covered bond programmes must meet a number of requirements that are explained in the Banking Supervision Handbook document "Registration of Covered Bonds: process and information requirements (BS18)" (PDF 79KB). Existing covered bond programmes (at the time of commencement of the law) must be registered under the Act if it is intended to issue covered bonds under the programmes.

Register and limit on issuance

The Reserve Bank maintains a public register of registered covered bond programmes.

The Reserve Bank imposes a limit on banks' issuance of covered bonds, via their conditions of registration. This limit is set at 10 percent of a bank's total assets, in order to balance the benefits of covered bond issuance against the potential impact on unsecured creditors.


Read the Covered bonds background for previous information and consultations leading up to the law being passed

More information on covered bonds in New Zealand is available in this Bulletin article Discovering covered bonds – the market, the challenges, and the Reserve Bank's response.