Georgia, the EBRD, and a New Model for Emerging Covered Bond Markets

By Jim Metaxas, Managing Director and Global Head of Business Development, TAO Solutions

Covered bonds are, by most measures, one of the most successful funding instruments of the past century. They give banks long-dated, secured funding at a meaningful discount to senior unsecured debt, and they give investors a highly-rated, dual-recourse exposure that has weathered every major crisis since the instrument's nineteenth-century origins. Globally, the asset class now exceeds €3 trillion outstanding.

So it is notable that, despite this success, very few emerging markets have a functioning covered bond market.

There are a number of reasons, however, over the past decade, jurisdictions from Singapore to Morocco to Brazil have enacted covered bond frameworks. Georgia did so in late 2022, with the National Bank of Georgia (NBG) publishing supporting regulations in March 2023. Yet inaugural issuance has lagged in many of these markets.

A significant obstacle is the gap between framework and issuance is an infrastructure gap. And it is a gap that, until recently, every issuer in every new jurisdiction has had to close on its own.

This week, TAO Solutions announced that we have been selected by the European Bank for Reconstruction and Development (EBRD) to deliver a different approach in Georgia: a single covered bond administration and treasury management platform, made available to every bank licensed by the NBG. In this post, we want to explain why this model matters — and why we believe it is the most efficient way for any emerging or developing capital market to stand up a covered bond programme.

The hidden cost of a "first issuance"

A covered bond programme is not a single product. It is a small operational ecosystem: cover pool management, asset eligibility testing, over-collateralisation monitoring, derivative and liquidity coverage, investor reporting in the formats rating agencies and regulators expect, and ongoing compliance with both the local covered bond law and any applicable European or international standards.

In an established market, Germany, France, the Nordics, the operational toolkit for this ecosystem is largely a commodity. Banks license proven software, plug into market-standard data formats and bring a programme to market in a matter of months.  In a new jurisdiction, this is materially more difficult. The first issuer in any market typically has to:

• Interpret a new covered bond law and central bank regulations into operational requirements
• Build or procure systems for cover pool eligibility, stress testing and OC monitoring
• Design investor and regulatory reporting templates from scratch
• Educate auditors, trustees and rating agencies on the local framework
• Bear the entire fixed cost of all of the above before issuing a single bond

For a large bank, this is manageable. For a small to mid-sized bank, the kind that most needs the cost of funding improvements that covered bonds provide, it is often prohibitive. And even when the first issuer pushes through, the second and third issuers in the market often duplicate much of the work, because the first issuer's infrastructure is proprietary.  The result is what we sometimes describe as a cold-start problem: a market that exists on paper but stalls in practice.

Shared infrastructure as a market-development tool

The model the EBRD has commissioned in Georgia is structurally different. Rather than financing a single issuer's build, the EBRD's Local Currency and Capital Markets Development (LC2) initiative is funding a single platform to be made available to every licensed bank in the jurisdiction.

This changes the economics of market entry in three ways.

First, fixed costs become shared costs. No individual bank has to absorb the full cost of standing up covered bond infrastructure. The cost of the platform is shared across the participating institutions, which means smaller banks can credibly run a programme.

Second, the regulator gets standardisation by design. When every issuer uses the same platform, the National Bank of Georgia receives consistent, comparable, high-quality data across all participants. Supervision becomes meaningfully easier. Stress testing across the system becomes possible. Data quality is high from day one rather than after years of iteration.

Third, investors and rating agencies see a coherent market. Standardised disclosures in the formats international investors expect remove a friction that often holds back foreign participation in emerging covered bond markets. Rating agencies can apply consistent methodologies. Cross-issuer comparisons become straightforward.

The platform we are deploying in Georgia, anchored by our SecureHub covered bond administration and treasury management system, is the same technology used by several of the world's top banks. What is new is not the technology itself; it is the model under which it is being deployed.

A template, not a one-off

The Georgia engagement is tailored to NBG regulaotry reporting regulations. But the underlying platform is jurisdiction-agnostic. The EU Covered Bond Directive, the German Pfandbrief framework, the French obligations foncières regime, and emerging frameworks across Central Asia, the Middle East and Latin America can all be supported on the same technology, configured to local rules.

That means the model the EBRD has commissioned for Georgia is not a one-off. It is a template. Any multilateral, central bank or regulator looking to accelerate covered bond market development in their jurisdiction can deploy the same approach: a single, shared, regulator-endorsed platform that removes the fixed-cost barrier to market entry.

For regulators in jurisdictions where a covered bond law already exists but issuance has not followed, this is, in our view, the missing piece.

What this means for issuers

The same logic applies at the institutional level. Banks launching a first-time covered bond programme, or replacing legacy or internally-built systems, can deploy the same technology configured to their own jurisdiction's framework. The benefits of standardisation that flow to a market when every issuer is on shared infrastructure also flow to an individual issuer that adopts proven, market-tested technology: faster time-to-market, lower operational risk, easier engagement with rating agencies and investors, and a clear path to compliance with evolving disclosure regimes.

What's next

TAO Solutions will be at Global ABS 2026 in Barcelona and the 2026 ECBC Plenary, Covered Bond Congress in Seville. We are actively engaging with issuers, regulators and central banks in jurisdictions including the Middle East, Central Asia and Eastern Europe, and we welcome conversations about how the model deployed in Georgia could be adapted to other markets.

To discuss covered bond infrastructure for your jurisdiction or institution, contact us at info@taosolutions.ca.