Standard & Poor’s raised its rating of covered bonds issued by Panama’s Global Bank from BBB- to BBB, on stable outlook, on Thursday, after an upgrade of the issuer and the transfer of transaction bank accounts.

S&P upgraded Global Bank Corp from BB+ to BBB- in March. The covered bonds were on CreditWatch positive before last week’s upgrade while the notes’ bank accounts were transferred from HSBC Bank (Panama) SA (rated BBB-, CreditWatch negative, A-3) to a branch of The Bank of Nova Scotia (A+, stable, A-1).

S&P said that the covered bonds’ rating is dependent on both the rating of Global Bank, as first recourse for the covered bonds, and the bank account provider. It said that although HSBC Bank (Panama) still acts as the trustee of the guarantee trust on which the pool of mortgages resides, the assets in the guarantee trust should remain bankruptcy-remote from the trustee.

“We updated our analysis on the transaction incorporating the current guarantee pool characteristics, the rating on GBC, and the new bank account holder, and determined that the transaction can withstand a stress scenario consistent with the assigned rating of one notch above the issuer credit rating,” said S&P. “This approach is consistent with our corporate recovery criteria, which indicate that a one notch uplift above the issuer credit rating would apply when recovery prospects are greater than 70%.”

It noted that the transaction could also be affected by a change in credit quality of the Republic of Panama, which provides an interest rate subsidy for preferential loans.