Všeobecná úverová banka (VÚB) of Slovakia has obtained a first rating of its covered bonds, with Moody’s rating the issuance A1 on Friday, and an official at the Slovak bank said the rating was sought in connection with launch of a new EMTN programme.

VUB has been issuing mortgage covered bonds since 1999, according to the official, but is establishing a new EMTN programme and decided to seek a rating of the covered bonds in connection with this move.

The new programme gives the issuer more flexibility, and together with the covered bond rating should make the bank’s covered bonds more attractive for investors, including foreign accounts, she told The Covered Bond Report.

“With a rating we should also be able to issue more cheaply,” she said.

VUB has primarily issued covered bonds domestically, but also in Austria and the Czech Republic, she added. It does not have plans to issue euro benchmark covered bonds.

VUB is the arranger of the new programme, according to the official.

Moody’s on Friday assigned an A1 rating to VUB’s mortgage covered bonds, of which there are some Eu1.43bn outstanding, according to the rating agency. As at March 2013, the cover pool stood at around Eu1.91bn. Just over 91% of the covered bonds are denominated in euros.

VUB issues covered bonds – hypotekárny záložný list (HZLs) – in accordance with the Slovak Banking Act, Slovak Bond Act and other regulations that together make up the country’s covered bond legal framework, according to Moody’s.

It said that VUB is the second largest banking group in Slovakia, with a reported domestic market share of around 18% for deposits and 19% for loans at year-end 2012.

Moody’s rates VUB A3, on negative outlook. It has assigned a Timely Payment Indicator (TPI) of “very improbable” to the HZLs, which have a TPI leeway of two notches.

Italy’s Intesa Sanpaolo is VUB’s majority shareholder, with a 96.84% stake, according to the Slovak bank.