ArmInfo. The National Assembly of Armenia made amendments to the laws "On Secured Mortgage Bonds" and "On Bankruptcy of Banks, Credit Organizations, Investment Companies and Insurance Companies" on March 21 at the first reading. The day before, the deputy chairman of the Central Bank of Armenia Nerses Yeritsyan informed that the package submitted by the government of the country is aimed at regulating the mortgage market of the country.
According to him, the law currently in force is significantly outdated compared with the numerous processes that are taking place on the world market. The presented package is designed to fill this gap, and bring the current legislation in line with the best international experience. As a result of the application of new legislative initiatives, the market for secured mortgage bonds is noticeably more active, the attractiveness of bonds issued in the country will increase for investors.
According to the package, the list of those assets that can serve as collateral for bonds is organized, the legal aspects of the market are detailed, including the methods and calculations laid down in the mortgage bond market. In addition, the order of obligations and responsibilities that will minimize risks to investors is streamlined. The institute of intermediary between commercial banks and investors will also be introduced.
Another package of laws adopted today at the first reading of the parliament concerns regulation of the institution of securitization of mortgage loans at the expense of other assets. In particular, it is about amendments to the laws "On Securitization of Assets and Secured Securities", "On Investment Funds", "On Funds", "On Joint Stock Companies" and the Civil Code. This package attempts to interest the shareholders of the funds. In addition, not only assets will be subject to securitization, but also the possibility of default, funds received, vehicles, etc., in other words, everything that can make a profit.
However, the application of this legal package, taking into account the risks, will require a longer time, noted the deputy head of the Central Bank of Armenia. As ArmInfo informed earlier, on December 12, 2017 for the first time in the Armenian capital market, securitization of mortgage loans was carried out and this process was marked by ARARATBANK and Universal Credit Company First Mortgage Company (PIK). In particular, PIK issued two tranches at once: dollar and AMD bonds in the amount of 100 million drams and $ 500,000, secured by mortgage loans, underwriter and market maker of which was made by ARARATBANK. According to Karen Zakaryan, deputy director general of NasDaq OMX Armenia, by the end of 2018 new issues are expected to be issued, the total amount of which will be equivalent to about $ 20-25 million.