Moody’s upgraded two mortgage covered bonds issued by Korea Housing Finance Corporation (KHFC) from Aa2 to Aa1 today (Thursday) because the rating agency revised assumptions made when KHFC began issuing covered bonds and has sufficient overcollateralisation.

The two issues are KHFC’s $500m 4.125% 2015s and $500m 3.5% 2016s.

Moody’s said that the upgrade followed the adjustment of “some conservative stresses that were applied in the initial ratings of the covered bonds when KHFC was a fresh issuer”.

The rating agency said that such a revision of rating assumptions was justified by KHFC’s proven track record of consistent underwriting criteria. The cover pools have a low average loan-to-value ratio of around 50% and an over-90-day delinquency rate below 0.6%, noted Moody’s.

KHFC provides 19% committed overcollateralisation for its 2015 covered bonds, and 18% for its 2016 covered bonds, according to the rating agency which said the levels are consistent with Aa1 rating targets of 11% and 13%, respectively.

KHFC’s covered bond issues are each backed by their own cover pool. The government-owned bank in February sold a third internationally targeted $500m covered bond, maturing in 2017, that is already Aa1 rated. KHFC has also issued five domestic covered bonds.