Parliament of Georgia to adopt a law on Mortgage Bonds at the current session, Trend reports via the Parliament of Georgia.

As reported, the new draft law determines the meaning of the collateral real estate, which is necessary for the issuance of securities.

After the adoption of the new law, commercial banks will be able to issue bonds ensured with mortgage loans, which will increase the volume of liquid products on the local asset market.

Currently, there is no special legislative regime in Georgia that would regulate the issuance of secured bonds. The traditional means of securing the property (collateral, mortgages) defined by the Civil Code are not an optimal and useful tool in this regard for the issuance of secured bonds. On the basis of the draft law, it will be possible to provide a special type of bond in Georgia, the so-called Covered Bond, which is considered to be a reliable banking product on the international financial markets.

“Covered Bonds (Mortgage Bonds) are secured by commercial bank lending requirements (mainly mortgage loans), which are legally separate from other assets of the Bank and which can be enforced only to meet the requirements of the bondholders”, the document reads.

Source: TREND News Agency