Moody’s upgraded covered bonds issued by Korea Housing Finance Corporation from Aa3 to Aa2 today (Wednesday), after having raised the issuer’s rating from A1 to Aa3 on Monday.

KHFC was one of six Korean government related financial institutions upgraded by Moody’s on Monday after the rating agency raised Korea’s sovereign rating from A1 to Aa3.

The two covered bond issues that were upgraded are backed by separate cover pools. They are a $500m 4.125% 2015 issue and a $500m 3.5% 2016 issue.

Moody’s said that the credit quality of the cover pools has been stable since the closing date of the two covered bonds. KHFC is committed to maintaining overcollateralisation of 19% for the 2015 issue and 18% for the 2016, according to the rating agency.

“After taking into consideration KHFC’s upgrade as well as the value of the cover pools based on their credit quality and the committed overcollateralisation, the rating of the two covered bonds is consistent with a Aa2 level, and which is one notch above KHFC’s issuer rating,” said Moody’s.

The two covered bonds have Timely Payment Indicators (TPIs) of “improbable”.

The rating agency also considered the replacement of principal paying agent and swap custodian Citibank NA with The Bank of New York Mellon, Hong Kong Branch in its rating action, it said.