Aareal Bank Group announced on 22 December that it is buying Corealcredit Bank from Lone Star. Meanwhile, several peripheral issuers and covered bonds were hit with negative rating actions over the holiday period.

Wolf Schumacher, Aareal CEO

Aareal cited a preliminary purchase price of Eu342m for the acquisition of Corealcredit, which it expects to be completed in the first half of the year. Corealcredit is the former troubled Allgemeine HypothekenBank Rheinboden, which US fund Lone Star took over in 2005 and turned into a specialist German commercial mortgage lender.

“By acquiring the newly realigned Corealcredit Bank, we are exploiting an attractive opportunity for inorganic growth at a favourable time,” said Aareal CEO Wolf Schumacher. “With this step, we are further expanding our position as one of the leading providers of commercial property financing, and at the same time making an active contribution to sustainably safeguarding the stability of an economically important segment of the German banking sector.”

Fitch affirmed Aareal Bank at A- on 27 December, and placed Corealcredit’s rating (BBB-) on Rating Watch Positive.

Mortgage covered bonds issued by Caixa Económica Montepio Geral were downgraded by Moody’s from Baa3 to Ba1 on 19 December and their rating left on review for downgrade. The cut followed a downgrade of Montepio’s issuer rating from Ba3 to B2. Moody’s said the review will take into account proposed bail-in-related changes to its methodology.

NCG Banco mortgage covered bonds (Ba1) are on review for downgrade, after Moody’s put the issuer’s B3 rating on review for downgrade on Monday. The issuer action followed the conditional sale of NCG Banco to Banco Etcheverria, part of Banesco Group of Venezuela.

Moody’s on 20 December put on review for downgrade mortgage covered bonds issued by AIB Mortgage Bank (Baa2), Bank of Ireland Mortgage Bank (Baa2), and EBS Mortgage Finance (Baa3), after downgrading the three issuing Irish banks’ senior unsecured ratings. It said the reviews will take into account the proposed changes to its methodology.

Unione di Banchi Italiane (UBI) was downgraded by Moody’s from Baa2 to Baa3, on negative outlook, on 18 December, but the rating agency affirmed the A2 rating of the bank’s OBGs the next day. The rating had previously been constrained by Italy’s A2 country ceiling and after the downgrade is constrained by the programme’s Timely Payment Indicator (TPI) of “improbable”.