Fitch cuts Greek programmes to new, B- country cap
Tuesday, 22 May 2012
Fitch has cut to B- Greek mortgage covered bonds issued by Alpha Bank, EFG Eurobank, National Bank of Greece and Piraeus because of a new country ceiling set at that level, representing a six notch downgrade for all but an NBG Programme I, which was lowered by three notches.
The other programmes’ ratings are rated B- on a probability of default basis and no uplift for recoveries can be granted above that cap, according to Fitch. In the case of NBG’s Programme I, the rating of the covered bonds on a probability of default basis is in line with the long term issuer default rating of the issuer (CCC), with a one notch uplift to B- able to be assigned for recoveries. All programmes bar this one were rated BBB- before the downgrades, carried out yesterday (Monday), with NBG’s Programme I previously rated BB-.
The rating actions follow a downgrade of Greece’s sovereign rating from B- to CCC and the revision of the country ceiling from AAA to B- on Thursday, and subsequent downgrades of the issuers’ ratings to CCC a day later.
“The mortgage covered bonds issued by Alpha, EFG, NBG and Piraeus have been downgraded as a direct result of the revision of the Country Ceiling to B- from AAA,” said Fitch, “and all Greek covered bond ratings are now capped by the Country Ceiling.”
The programmes remain on Rating Watch Negative because of uncertainty surrounding the political situation in Greece, said Fitch. The rating agency expects to downgrade the covered bonds further in the event that an exit of Greece from the European Monetary Union becomes probable, it said.
Fitch will separately address any impact of the lowering of the country ceiling on Cypriot mortgage covered bonds secured by Greek residential mortgages issued by Bank of Cyprus and Cyprus Popular Bank Public.