By contractual provisions, a specific test (the "Asset and Cash Flow Coverage Test") has to be performed by a third-party (the Programme Calculation Agent) entity acting on behalf of Covered Bondholders on an regular basis with the purpose of making sure that cash flows arising out of the cover pool will be at any time sufficient to cover any payments due under the Covered Bonds, maintaining at the same time the required 15% of minimum cash flow over-collateralisation.
The Asset and Cash Flow Coverage Test has to be performed on each date the cover pool amortises (every year on 31 January and 31 July) and every time CDP makes any change to the cover pool or issues new series of Covered Bonds.
In addition to the above, at any issuance of new debt the adequacy of cash flows arising out of the cover pool is verified by the rating agencies under conservative stressed scenarios with the purpose of confirming the AAA rating to the outstanding Covered Bonds and awarding the AAA rating to the new series.
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