Moody’s upgraded Eika Boligkreditt mortgage covered bonds from Aa2 to Aa1 yesterday (Thursday) because the Norwegian issuer’s covered bond anchor has improved by one notch, reflecting a revised assessment by the rating agency of the debt ratio available to absorb losses in a scenario of the issuer’s resolution.

The rating agency said that the reference point for determining the probability that Eika will cease making payments under the covered bond programme, its “anchor”, is the senior unsecured rating plus one notch, given that the relevant debt ratio, as recently assessed by Moody’s is 5%.

It said that following the upgrade of the anchor, and given a Timely Payment Indicator (TPI) of “high”, Eika’s mortgage covered bond rating is constrained at the Aa1 rating.

The rating agency does not disclose Eika Boligkreditt’s rating.