Fitch put Corealcredit mortgage Pfandbriefe on Rating Watch Positive today (Thursday) after the issuer withdrew a public overcollateralisation commitment in the wake of being upgraded, meaning that the rating agency will base its analysis on observed OC.

Corealcredit was upgraded by Fitch to BBB/F2 at the beginning of April as a result of being taken over by Aareal.

Announcing on Tuesday the withdrawal of the public commitment to 13% OC, which is effective as of 8 August, Corealcredit said it was reacting to the upgrade and the rating agency’s approach.

“As a result of the improvement in the short term rating to F2, the rating agency Fitch does not need a public commitment any longer, and is instead now applying the lowest overcollateralisation actually kept over the last 12 months in its Pfandbrief analysis,” said the bank.

Fitch confirmed this when announcing the RWP placement today, saying that the lowest observed OC of the past 12 months, 14.9%, provides upgrade potential for the AA- rating of the mortgage Pfandbriefe (Hypothekenpfandbriefe, or Hypfe).

Fitch only gives credit to legally required OC for issuers with short term ratings below F2 unless a public commitment to a higher level is provided.