Moody’s lifted public sector covered bonds issued by Depfa ACS Bank and EEA Covered Bond Bank to A1 today (Friday), after having raised its Irish country ceiling from A3 to A2 and having upgraded EAA CBB on Tuesday.

The rating agency upgraded the Irish sovereign rating to Baa3 last Friday (17 January) and raised the country ceiling as a result.

Depfa ACS are now rated one notch above the country ceiling and Moody’s said that in its case “various adverse elements expressed by the A2 country ceiling do not apply, or may apply only to a lesser extent, whilst the rating constraints from certain elements of the A2 country ceiling for Ireland, in particular the risk of redenomination, still apply”.

EAA CBB covered bonds are rated at the same level as the issuer, which Moody’s on Monday noted benefits from a cross-border guaranteed from German public sector entity Erste Abwicklungsanstalt, which is rated Aa1. The rating agency made similar comments about the relationship of EAA CBB’s rating to the country ceiling as it did for Depfa’s covered bonds.

Depfa ACS Bank is rated Baa3, stable, by Moody’s, and it has one notch of Timely Payment Indicator (TPI) leeway, the rating agency noted. EAA CBB covered bonds have six notches of TPI leeway. The programmes have TPIs of “probable-high”.

An analyst noted that the Depfa upgrade comes amid bidding for Depfa Bank plc, Depfa ACS Bank’s parent, which could result in a downgrade of the issuer and hence the covered bonds’ rating falling back given that the acquirer could well be a private equity buyer.