Ukraine gets new long-term financing tools: The Verkhovna Rada passed a law on securitization and covered bonds

The Verkhovna Rada of Ukraine adopted the draft Law of Ukraine No. 15172 “On Securitization and Covered Bonds” as a whole.

This is an important milestone for the Ukrainian capital market: the law sets up a legal framework for the launch of securitization and covered bonds — instruments widely used in European markets to attract long-term capital. In effect, a new market segment is arising in Ukraine, one that should help channel investors’ funds into lending, housing, infrastructure, and the business community.

“We have long discussed the need to create a modern capital market in Ukraine — one capable not only of facilitating securities transactions but also of actually channeling money into the economy. Today, we have taken one of the most significant steps in this direction. Securitization and covered bonds are mechanisms through which long-term capital can be channeled into lending, housing, the business community, and the country’s recovery. For us, this is truly a historic decision,” said Oleksii Semeniuk, NSSMC Chairman.

How it will work

Securitization allows assets that generate future cash flows — such as mortgages or other loans — to be pooled together and used to raise funds through the capital markets.

This allows financial institutions to avoid waiting many years for the full repayment of previously issued loans, and instead to obtain new funds and channel them toward further lending to the economy.

To carry out such transactions, the law provides for a specialized financial institution and mechanisms for separating assets that ensure payments to investors.

Covered bonds operate under a different model: the fulfillment of obligations to their holders is additionally secured by a specially created pool of assets. This creates an additional layer of investor protection and offers issuers another channel for raising long-term financing.

The law also sets requirements for participants in the new market, risk management, and information disclosure, as well as mechanisms for investor protection, and defines the regulatory and supervisory powers of the NSSMC and the National Bank of Ukraine.

A law created in tandem with the market

The draft law was the result of a joint effort by the NSSMC and the Verkhovna Rada Committee on Finance, Tax, and Customs Policy.

The document is based on an analysis of the needs of the Ukrainian market and a practical dialogue with the business community and its participants. The goal was not simply to transpose European standards into Ukrainian law, but to create mechanisms that would meet the real needs of the economy and function effectively under Ukrainian conditions.

The law has an important European integration dimension: the new regulation brings Ukraine closer to European Union rules on securitization and covered bonds and establishes a financial infrastructure that is clear for both Ukrainian and international investors.

For the NSSMC, the adoption of the law is also the result of consistent efforts to expand the range of tools through which private capital can contribute to the Ukrainian economy.

The NSSMC extends its gratitude to the Verkhovna Rada Committee on Finance, Tax, and Customs Policy and its Chair, Danylo Hetmantsev, for partnership and collaboration on the draft law. Special thanks go to the Ukrainian MPs who supported this decision, which is important for the development of the Ukrainian capital market.