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CDP issues Covered Bonds on the back of specific provisions on asset segregation contained in Article 5 Paragraph 18 of Law Decree 269 of 30 September 2003.
The cover pool securing CDP's Covered Bonds is held on the balance sheet of the originator, which also issues the bonds, being effectively ring-fenced for the exclusive benefit of Covered Bondholders.
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 Asset segregation on balance sheet. Assets and legal rights are segregated for the benefit of Covered Bondholders by adopting a specific corporate resolution to be deposited with the Chamber of Commerce of Rome. As of the date on which the corporate resolution is deposited, the segregated assets and legal rights are exclusively secured for the repayment of the rights of the Covered Bondholders and constitute separate assets from those of the company (the so-called "Patrimonio Destinato"). In relation to each cover asset CDP holds separate accounting books and records.
In case the issuer is insolvent, the following consequences occur:
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Preferential claim. The cover pool is excluded from other creditors' claims until all the claims of the covered bondholders have been fully satisfied
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Bankruptcy remoteness. The cover pool, including hedging derivatives, is run on a separate basis and cash-flows arising from the cover pool are exclusively used to timely pay the Covered Bondholders
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No acceleration of payments. The Covered Bondholders continue to receive payments under the Covered Bonds according to their terms and maturities. Covered Bonds become due and payable only in case of non-payment
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Defined pool administration. The insolvency administrator looks after the cover pool on behalf of Covered Bondholders. In order to ensure timely payments of principal and interest under the Covered Bonds, he is entitled to transfer the cover pool to banks or to entrust them for its management
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