Fitch revised the outlook on AAA-rated Belfius Bank mortgage-backed covered bonds from negative to stable yesterday (Tuesday) following an upgrade of the bank’s Viability Rating, and despite a negative outlook on the issuer default rating.

The rating agency upgraded the Belgian bank’s Viability Rating (VR) from bb+ to bbb+ on Thursday. It said that the outlook on the pandbrieven was changed to stable despite the issuer default rating (IDR), of A-, being on negative outlook. This is because a downgrade of the IDR to Belfius’s VR would be compensated by an IDR uplift of “1” assigned to the covered bond programme.

Fitch also affirmed the covered bond ratings at AAA. This takes into account a revision of breakeven overcollateralisation (OC) from 26% to 23% for the programme, which was driven by improved maturity mismatches between the assets and liabilities under updated cashflow analysis assumptions for the programme.