REG - Banco Bil.Viz.Argent - 20220708 OIR Public Sector Bonds

Banco Bilbao Vizcaya Argentaria SAAnnouncement

08/07/2022 08:15

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RNS Number : 8251R  Banco Bilbao Vizcaya Argentaria SA  08 July 2022

Banco Bilbao Vizcaya Argentaria, S.A. ("BBVA" or the "Issuer"), in accordance
with the provisions of the Securities Market legislation, communicates the
following:

 

OTHER RELEVANT INFORMATION

 

Following today´s entry into force, effective today, of the First Book of
Royal Decree-law 24/2021, of November 2, on the transposition of European
Union directives in the areas of covered bonds, cross-border distribution of
collective investment undertakings, open data and reuse of public sector
information, exercise of copyright and related rights applicable to certain
online transmissions and retransmissions of radio and television programs,
temporary exemptions for certain imports and supplies, for consumers and for
the promotion of clean and energy efficient road transport vehicles (the
"Royal Decree-law 24/2021"), it is hereby stated that the public sector bonds
already issued by BBVA and which are still outstanding (a list of which is
included in Annex 1 to this press release):

(i) They will maintain their current conditions under the specific terms
included in the corresponding issue documents (securities, if any, and final
terms) under which they are issued (term, maturity date, interest, etc.).

(ii) They are covered under BBVA´s public sector bond program approved by the
Bank of Spain on July 4, 2022 (effective as of July 8, 2022, coinciding with
the entry into force of Royal Decree-Law 24/2021) and which will be in force
until July 8, 2025 (the "Program").

(iii) That, in accordance with Royal Decree-law 24/2021, the new cover pool of
the aforementioned public sector bonds will become that established for such
covered bonds as set forth in the Program.

(iv) That the cover pool monitor of the Program designated by BBVA pursuant to
the provisions set forth in Chapter 1, Title VI, of the First Book of Royal
Decree-law 24/2021 is Deloitte Advisory, S.L., as authorized by the Bank of
Spain on July 4, 2022 (effective as of July 8, 2022, coinciding with the entry
into force of Royal Decree-Law 24/2021).

(v) In accordance with the provisions of Royal Decree-law 24/2021, and in
particular with its First Transitory Provision, as from July 8, 2022, the
issues listed in Annex 1 will be subject to the application of Royal
Decree-law 24/2021, and therefore the conditions of the Program, without the
holders of such securities having any action against BBVA as issuer to claim
their early maturity as a consequence of this modification in the legal
regime.

(vi) The information published by BBVA on the Program, in accordance with
article 19 of Royal Decree-law 24/2021, will be available, from the moment
such information is available, on the website
https://shareholdersandinvestors.bbva.com/debt-investors/issuances-programs/covered-bonds
and will include: value of the cover pool; geographic distribution and type of
cover assets; valuation method of the loans and assets under guarantee;
market, interest rate, currency, credit and liquidity risks; maturity
structure of the hedging assets and liabilities; levels of necessary and
available coverage; levels of legal, contractual and voluntary
overcollateralization; percentage of loans in which a default is considered to
have occurred; and identification of the cover pool monitor. The Issuer shall
update such information on a quarterly basis in accordance with the provisions
of the aforementioned article 19 of Royal Decree-Law 24/2021.  In addition,
the necessary information on the transition process in accordance with the
Second Transitory Provision of Royal Decree-law 24/2021 will be available on
said website.

Regardless of the full application of Royal Decree-law 24/2021, a summary of
some relevant aspects of the same is attached as Annex 2.

 

Madrid, on July 8, 2022.

 

ANNEX 1

LIST OF PUBLIC SECTOR BONDS ISSUED AND OUTSTANDING

 ISIN          Maturity       Outstanding principal

               (DD/MM/YYYY)   (€)
 ES0413211477  03/08/2023      200.000.000
 ES0413211980  14/10/2024      500.000.000
 ES0413211998  12/06/2025      1.500.000.000
 ES0413211A00  14/09/2025      1.500.000.000
 ES0413211A42  20/10/2026      2.000.000.000
 ES0413211A67  22/03/2027      540.000.000

 

 

ANNEX 2

Description of the new Royal Decree-Law 24/2021, applicable to Public Sector
Bonds

 

Pursuant to Article 2 of Royal Decree-Law 24/2021, the following definitions
apply:

a.  "Covered Bond", the mortgage cover bonds, public sector cover bonds or
internationalization cover bonds issued by a credit institution in accordance
with the provisions of the Royal Decree-law 24/2021 and secured by hedging
assets of their corresponding cover pools to which the investors of these
bonds may have direct recourse in their capacity as preferred creditors.

b.  "covered bond program" the structural characteristics of one or several
issues of a type of Covered Bond that are determined by applicable legal
regulation and by contractual clauses and conditions, in accordance with the
permission granted to BBVA by the Bank of Spain.

c. "cover pool" a pool of clearly defined assets that secure the payment
obligations attached to a determined Covered Bond program and that are
segregable from other assets of the issuing entity in the cases provided for
by law.

The Covered Bonds, like the Public Sector Bonds, represent unsubordinated debt
for the Issuer, bear interest, are repayable by early redemption or at
maturity, and may be traded in domestic and/or foreign markets.

Without prejudice to the universal patrimonial responsibility of the Issuer,
the totality of the principal and interest of the Public Sector Bonds, both
accrued and future, will be specially guaranteed without the need to assign
the assets in guarantee by public deed, nor any registration in any public
registry or any other formality by a preferential right on the totality of the
assets that make up its cover pool, including their present and future yields,
as well as any collateral received, if applicable, in connection with
positions in derivative contracts and any damage insurance rights, identified
in the corresponding special registry of the Issuer, all in accordance with
the legislation in force.

Covered Bonds Program

The Public Sector Bonds as Covered Bonds, in accordance with Royal Decree-law
24/2021 require the prior administrative authorization in force by the Bank of
Spain of the "covered bond program" of each category of Covered Bonds, in
accordance with article 34 of Royal Decree-Law 24/2021.

Cover pool of the Program

From the date of entry into force of Royal Decree-law 24/2021, the Public
Sector Bonds will be specially guaranteed by the assets of the coverage pool
specified in the Program, which in accordance with the legislation will be
comprised of the following assets:

(i)    The eligible primary assets listed in letter a) of Article 129. 1 of
Regulation No. 575/2013 of the European Parliament and of the Council of 26
June 2013, on prudential requirements for credit institutions, and amending
Regulation (EU) No. 648/2012, and which form part of its cover pool, by the
eligible replacement assets, by the liquid assets that make up the liquidity
buffer of its cover pool, and by the economic flows generated by the
derivative financial instruments linked to each issue, all in accordance with
the legislation in force and the corresponding issue program authorized by the
Bank of Spain.

(ii)   The Public Sector Bonds may be backed up to a limit of 10% of the
principal amount by the following substitute assets:

a.    fixed income securities admitted to trading on regulated markets
issued by (a) central governments or central banks of the ESCB, public sector
entities, regional governments or local authorities of the European Union, or
guaranteed by them, and (b) central governments or central banks of third
countries, multilateral development banks, international organizations, public
sector entities, regional governments or local authorities of third countries,
all of them with credit quality step 1, or guaranteed by them; and/or

b.    short-term deposits in credit institutions that comply with the
provisions of Article 129.1 (c) of Regulation No. 575/2013 of the European
Parliament and of the Council of 26 June 2013 on prudential requirements for
credit institutions and amending Regulation (EU) No. 648/2012.

(iii)  The Public Sector Bonds Securities must have the minimum level of
legal over-collateralization provided for in the first paragraph of Article
129.3a of Regulation (EU) No. 575/2013 of 26 June 2013.

(iv)  The Issuer may not with respect to the loans subject to the cover pool,
except with the express authorization of the cover pool monitor and, if
applicable, subject to the conditions that it may establish none of the acts
included in article 23.7 of Royal Decree-Law 24/2021.

Assets consisting of credits or loans shall be included in the cover pool and
shall serve as collateral for the total amount of the principal outstanding,
regardless of the amount with which they contribute to the cover. In no case
may the same asset belong to two different cover pools. Partial inclusion of
assets in the cover pool is also not permitted.

The covered bond programs shall guarantee that, at all times, the liabilities
of the Coverd Bonds of said program are covered by the credit rights linked to
the hedging assets under the terms set forth in Royal Decree-Law 24/2021.

 

Special accounting record

Pursuant to article 9 of Royal Decree-law 24/2021, BBVA keeps a special
accounting record where each and every one of the loans and, if applicable,
the drawn portion of the credits, replacement assets, assets to cover the
liquidity requirement and derivative instruments, which make up each of the
coverage pools of each Covered Bond program, as well as, if applicable, any
collateral received in connection with positions in derivative instruments and
any credit rights derived from the insurance against damages attached to the
issue, are recorded.

Nature and regime of the cover pool

Pursuant to Article 7 of Royal Decree-law 24/2021, every Covered Bond program
must have, at all times, a cover pool. The Issuer shall ensure that the cover
pool is made up of collateral with different characteristics in terms of
structure, duration and risk profile.

For these purposes, the Issuer shall have internal policies and procedures to
ensure compliance with this principle in the composition of the portfolio that
meet, in particular, the following requirements:

a.    they must explicitly include internal rules and tests of granularity
and concentration, on potential maturity, duration and interest rate
mismatches and, if applicable, exchange rates;

b.    they must be approved by the Issuer's management body; and

c.    the part of the information on such policies and procedures that is
most relevant to the investor must be included in the contractual terms and
conditions.

Control Body of the cover pool of each Program

The Issuer must, in accordance with article 30 of Royal Decree-law 24/2021,
have for each covered bond program, the designation of a cover pool monitor,
which will act at all times in the interest of the investors and whose
function is to permanently monitor the cover pool associated with each Covered
Bond issued. The cover pool monitor is in charge, amongst other things, of
authorizing the entries and exits of the special register of each cover pool.

In any case, each cover pool must have a control body, which may be external
or internal, and which will be appointed in accordance with the provisions of
article 31 of Royal Decree-law 24/2021.

Supervision by the Bank of Spain

The public supervision of the Covered Bonds programs will correspond to the
Bank of Spain, which must provide its authorization for the formalization of a
Covered Bonds program, and has the power to obtain the necessary information,
carry out as many investigation activities and impose such sanctions as may be
necessary to perform its supervisory function and ensure that the requirements
set forth in Royal Decree-law 24/2021 are complied with. In this regard, the
Issuer shall provide to the Bank of Spain upon request any information that
the Bank of Spain deems necessary and, at least on a quarterly basis, the
information required by Article 35 of Royal Decree-law 24/2021.

Order of priority and effects of the Issuer's tendering process

The Covered Bonds incorporate the holder's credit right against the Issuer and
shall be enforceable under the terms set forth in Law 1/2000, of January 7, on
Civil Proceedings, in order to claim payment from the Issuer after their
maturity. The credit right shall extend to the totality of the payment
obligations associated with the Covered Bonds.

The holders of the Covered Bonds shall have the status of creditors with
special preference provided for in number 8 of article 1922 and number 6 of
article 1923 of the Civil Code, as opposed to any other creditors in relation
to the loans and credits integrated in the corresponding cover pool, to the
replacement assets and to the economic flows generated by the derivative
instruments or credits derived from the insurance against damages, if it
exists, in accordance with the provisions of Chapter III, Title XVII, of Book
Four of the Civil Code.

All holders of Covered Bonds, regardless of their date of issue, will have the
same priority over the loans and credits that guarantee them and, if any, over
the replacement assets and over the economic flows generated by the derivative
financial instruments linked to the specific issues.

Likewise, in the event of insolvency of the Issuer, the holders of the Covered
Bonds will enjoy the special privilege established in number 7 of article 270
of the consolidated text of the Insolvency Law, approved by the Royal
Legislative Decree 1/2020, of May 5.

The opening of the insolvency proceedings or the resolution of the Issuer,
notwithstanding the fact that, if applicable, it may result in the extension
of the maturity of any issue of Covered Bonds, shall in no case:

(i)    shall produce the automatic early termination of the payment
obligations associated with the Covered Bonds, nor shall it affect in any way
the fulfillment of the rest of the obligations associated with the Covered
Bonds, without prejudice to the provisions of Article 42.2 of Law 11/2015;

(ii)   entitle the holder of Covered Bonds to urge their early maturity;

(iii)  entail the suspension of the accrual of interest on the Covered Bonds;
nor

(iv)  be cause for maturity or early termination of the derivative contracts
integrated in a hedging pool.

In the event of insolvency of the Issuer, a special administrator will be
appointed, from among the persons proposed by the FROB, to administer the
corresponding Covered Bonds program and to watch over the rights and interests
of the investors, after consulting the Bank of Spain, materially segregating
from the Issuer's assets from the assets comprising the cover pool of each
Covered Bonds program, becoming a separate asset without legal personality.

The segregation implies that the hedging assets:

(i)    do not form part of the insolvency estate until the privileged
credit right of the holders of the Covered Bonds and the derivative
counterparties and the expenses derived with the maintenance and
administration of the separate estate and, if applicable, with its liquidation
are satisfied; and

(ii)   are protected against the rights of third parties and cannot be
rescinded by application of the reinstatement actions provided for in the
insolvency legislation, except in the case provided for in Article 42.2 of
Royal Decree-Law 24/2021.

The special administrator will determine that the assets registered in the
special registry, together with the corresponding liabilities, are transferred
to form the separate estate without legal personality.

Once the transfer has been made, if the total value of the assets is greater
than the total value of the liabilities plus the legal, contractual or
voluntary over-collateralization and the liquidity requirement, the special
administrator may decide whether to continue with the current management of
the separate estate until its maturity or to make a total or partial transfer
of the separate estate to another entity issuing covered bonds. In any case,
it will be understood that the total or partial assignment constitutes a new
program for such entity, which will require the authorization provided for in
Article 34 of Royal Decree-Law 24/2021.

On the other hand, if the total value of the assets is less than the total
value of the liabilities plus the legal, contractual or voluntary
over-collateralization and the liquidity requirement, the special
administrator will request the liquidation of the separate estate following
the ordinary bankruptcy procedure in accordance with the provisions of Article
46 of Royal Decree-Law 24/2021.

In the event that the privileged claim cannot be fully settled against the
cover pool, the holders of the Covered Bonds will have a claim against the
Issuer with the same priority as the other claims of the unsecured creditors.
If, once the credit with the investors in the Covered Bonds is fully settled
against the cover pool, there is any remainder, it will correspond to the
insolvency estate.

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