Ukraine's parliament has approved legislation aimed at creating new sources of long-term financing for housing construction and expanding access to affordable homes, reported Ukraine Business News.

The Verkhovna Rada passed a bill on securitisation and covered bonds in its second reading, according to Danylo Hetmantsev, chairman of the parliamentary committee on finance, tax and customs policy.

The legislation introduces securitisation bonds and covered bonds, financial instruments designed to channel capital from non-state pension funds, foreign investors and other institutional investors into the Ukrainian economy.

Under the framework, specialised financial intermediary companies known as special purpose vehicles (SPVs) will be able to purchase pools of loans from banks and issue securities backed by those assets. This structure is intended to allow banks to convert existing loan portfolios into securities that can attract investment from institutional investors seeking longer-term assets.

The legislation also sets requirements covering asset quality, market participants and risk management. It includes restrictions on entities linked to Russia, sanctioned individuals and other organisations or people prohibited from participating in the market.

Additional safeguards are intended to protect investors and consumers of financial services as the new instruments are introduced.

A functioning securitisation and covered bond market could provide Ukrainian banks and property developers with access to longer-term funding, which is particularly important as the country seeks to rebuild damaged housing stock and finance new construction.

For banks, the ability to securitise loan portfolios could provide an additional source of liquidity beyond traditional deposits and lending facilities. For developers, greater availability of long-term financing could help support projects that require substantial upfront investment and have extended repayment periods.