Sweden’s Stadshypotek has set up a cover pool comprising Norwegian mortgage loans, with Moody’s having today (Monday) assigned a provisional Aaa rating to covered bonds backed by it.

Stadshypotek, a subsidiary of Svenska Handelsbanken, already issues covered bonds backed by a cover pool of Swedish assets under Sweden’s covered bond legislation, which will also govern the sale of covered bonds backed by the issuer’s newly established Norwegian cover pool.

“Covered bonds that the issuer states are backed by the Norwegian cover pool will not have recourse to the issuer’s Swedish cover pool, and vice versa,” said Moody’s. “For the purposes of publishing ratings and research, Moody’s will therefore treat covered bonds backed by the Norwegian cover pool as forming a separate programme from those backed by the Swedish cover pool.”

The rating agency has assigned the covered bonds a Timely Payment Indicator (TPI) of “probable”, and the cover pool a collateral score of 8.8%. Minimum overcollateralisation consistent with a Aaa rating is 2.5%, said Moody’s provisionally.

As of the launch date, the total value of the assets expected to be included in the cover pool, comprising 10,646 mortgage loans, is around Nkr26.3bn (Eu3.36bn), according to Moody’s. The pool includes mainly single family residential mortgage loans (79%), but also residential loans secured on bostadsratt or condominiums (16%), and a small number of multi-family loans to commercial and housing association landloards (5%).