Moody’s upgraded from Aa2 to Aa1 unguaranteed public sector covered bonds issued by Hypo Tirol Bank yesterday (Monday), after upgrading the Austrian issuer’s rating from Baa3 to Baa2, on negative outlook, on Friday.

Hypo Tirol’s unguaranteed public sector programme has been assigned a Timely Payment Indicator (TPI) of “high” by Moody’s and the covered bond anchor is its senior unsecured rating plus zero notches. The programme now has zero TPI leeway, noted Moody’s.

The Aa1 rating requires overcollateralisation of 16% of which 8.5% must be provided on a “committed” basis, and the OC in Hypo Tirol’s public sector cover pool is 653%, with 9.5% provided on a committed basis, according to the rating agency.

Moody’s said that, in spite of an upgrade on Friday of Hypo Tirol’s backed rating from Baa2 to Baa1, guaranteed public sector covered bonds issued by the bank – which benefit from the same deficiency guarantee as the backed debt – were not upgraded from Aa1, because the OC provided – which is the same as for the unguaranteed programme – is not commensurate with a Aaa rating, which would require committed OC of 26.5%. The guaranteed covered bonds nevertheless now have a TPI leeway of one notch, having the same “high” TPI as the unguaranteed programme.