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Covered Bonds

Global Home > Covered Bonds

Major UK Bank Covered Bond Ratings Resilient to 'No-Deal' Brexit

Fitch Ratings says the 'AAA' ratings of covered bonds issued by major UK banks continue to show strong credit characteristics, which should help them endure potential deterioration in their environment as a consequence of 'no-deal' Brexit.

Fitch Assigns Credit Suisse (Schweiz) AG Soft-Bullet Covered Bond Final 'AAA'; Outlook Stable

Fitch Ratings has assigned Credit Suisse (Schweiz) AG's (CS Switzerland, A/Positive/F1) first mortgage covered bond a final rating of 'AAA' with a Stable Outlook. CS Switzerland's first issue is a CHF250 million fixed-rate bond, with a 10-year maturity and a 12 month soft-bullet feature. 

Dutch Hard & Soft-Bullet CVB Benefit from High Issuer Ratings

The 'AAA' ratings of the mortgage covered bonds issued by ING Bank N.V. (AA-/Stable) under its two programmes, by ABN AMRO Bank N.V. (A+/Stable) and by De Volksbank (A-/Stable) are supported by their high issuer ratings. They allow the 'AAA' breakeven asset percentage (AP) of ING's and ABN AMRO's covered bonds to be based on a recovery analysis above the rating floor for the covered bonds, leading to high 'AAA' breakeven AP for these programmes. 

Norwegian Floating-Rate Mortgages Show Strong Buffers

Fitch Ratings says strong competition, affordability rules and robust social safety nets mitigate risks from the high level of residential mortgage debt bearing a floating interest rate in Norway. This is highlighted in a third of a series of reports published by Fitch exploring unique features of selected mortgage markets. 

Fitch Assigns 'AAA' Final Ratings to AXA Home Loan SFH's OFH; Outlook Stable

Fitch Ratings has assigned AXA Home Loan SFH's (AXA HL SFH) obligations de financement de l'habitat (OFH) 'AAA' ratings. The Outlook is Stable.

Fitch Assigns Arkea Home Loan SFH's OFH 'AAA' Final Ratings ; Outlook Stable

 Fitch Ratings has assigned Arkéa Home Loan SFH's (Arkéa HL SFH) obligations de financement de l'habitat (OFH) final 'AAA' ratings. The Outlook is Stable. 

Higher Canadian Covered Bond Cap May Aid Small Bank Funding

The recent revision of the Canadian covered bond issuance cap by regulators to 5.5% from 4.0% of issuer assets is not likely to impact the funding or credit profiles of the existing CB issuers. However, to the extent the cap increase provides smaller banks access to low-cost funding, it would be viewed positively from a credit perspective. 

No Concerns Over Slow Amortising Swiss Mortgages

Current Swiss loan-to-value (LTV) ratios are sustainable with strong recovery rates calculated under our stressed market value decline assumptions, despite slow amortisation, Fitch Ratings says in a new report.The report analyses the risks and mitigants associated with slow mortgage amortisation and high mortgage debt in Switzerland.

No Impact on CVB from Revised Short-Term Ratings Criteria

Fitch Ratings says it does not expect its covered bonds ratings to be impacted by the agency's revised Short-Term Ratings Criteria. This is despite that changes to bank's Short-Term Issuer Default Rating (IDR) may lead to a change in the level of overcollateralisation protection taken into account by Fitch in its analysis of covered bonds. 

Surveillance Snapshot

See the latest quarterly information for Fitch-rated covered bond programmes globally.

'BBB' Category Exposures Unlikely to Jeopardise CVB Ratings

Fitch Ratings does not expect the additional eligibility of credit quality step 3 (CQS3) counterparty exposures - equivalent to 'BBB' category ratings - envisaged in the legislation on covered bonds harmonisation, which have been provisionally approved by the EU parliament on 18 April 2019, to materially weaken covered bonds' credit risk.

Unique Mortgage Market Features

In the first of a series exploring unique features of certain mortgage markets, Fitch Ratings analyses the risks and mitigants associated with long mortgage tenors in Sweden.

Italian Deposit Ratings Expand Eligible Counterparties for 'AA' CVBs

The recent assignment of a Deposit Rating (DR) to Italian banks, in those cases where it is higher than the bank's Issuer Default Rating, makes Italian covered bonds with internal counterparties more resilient to issuer downgrades. Under Fitch's Structured Finance and Covered Bonds Counterparty Rating Criteria, the agency uses the DR, when available, as a reference rating for account banks' eligibility thresholds. 

SG Covered Bonds Use Distributed Ledger Technology; No Impact

The use of a Distributed Ledger Technology (DLT) platform to register Societe Generale SFH's Obligations de Financement de l'Habitat (OFH) has no rating impact on the underlying covered bonds.

EU Covered Bonds Directive Broadly Positive; Impact Uneven

 The EU's covered bonds directive broadly supports the credit quality of the asset class by setting minimum standards in key areas. In practice, existing national regulations and market conventions already meet many of these standards, but where this is not the case, the directive could be positive for some covered bond ratings. 

Italian Covered Bonds Peer Review

The five 'AA' rated Italian mortgage covered bonds programmes (Obbligazioni Bancarie Garantite, OBG) are resilient to negative rating actions on the respective banks' Issuer Default Ratings (IDRs), owing to the three-to-four-notch cushion against an issuer downgrade

 

Click Below for more information on the 
Italian Covered Bonds Peer Review

rating action

Fitch Rates Westpac's Series 2019-C3, C4 & C5 Mortgage Covered Bonds 'AAA'; Outlook Stable

The 'AAA' covered bond rating is based on WBC's Long-Term Issuer Default Rating (IDR) of 'AA-', an IDR uplift of zero notches, a payment continuity uplift of six notches, a recovery uplift (RU) of one notch and the asset percentage (AP) of 91.0% used in the programme's asset coverage test, which provides more protection than Fitch's breakeven AP of 91.5%. 

Mid-Sized UK Banks' Cover Pools See Stable Credit Risk

They benefit from large over-collateralisation buffers above the level supporting their current ratings and high quality mortgage cover pools. The six programmes included in the peer review are those of Coventry Building Society (Coventry), Yorkshire Building Society (Yorkshire), Leeds Building Society (Leeds), Skipton Building Society (Skipton), Clydesdale Bank plc (Clydesdale) and The Co-operative Bank Plc (Co-op).

rating action

Virgin Money's Covered Bond Final 'AAA'

With its first issue, VM has become the first UK covered bond issuer where both assets and liabilities are fully linked to the SONIA rate. The initial issue is an unhedged GBP500 million floating-rate note paying compounded SONIA with a five-year maturity and a one-year soft-bullet feature.

Webcast

IBOR Transition Webinar

Available On-Demand

Fitch’s Chief Credit Officer, Jeremy Carter, and Group Credit Officer, Andreas Wilgen, discuss the progress which has been made to prepare financial markets for the discontinuation of IBOR indices and highlight the risks which still remain.

 

Listen Now

rating action

The Co-operative Bank's CVB on Rating Watch Negative

The covered bonds have been placed on RWN because they are rated at their maximum achievable level above Co-op's IDR and the IDR has been placed on RWN. The covered bonds rating will be impacted by any action taken on Co-op's IDR. 

Credit Hotspot: Conditional Pass-Through Mortgage Covered Bonds

Latest: Bank of Cyprus Covered Bonds Upgraded to 'BBB' on New Data

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