Moody’s placed on review for downgrade covered bond programmes of Hypo Landesbank Vorarlberg, Hypo NOE Gruppe Bank and Hypo Tirol Bank yesterday (Tuesday), following the initiation of resolution measures on Heta Asset Resolution, the wind-down entity of Hypo Alpe-Adria-Bank.

The rating agency’s action came after it put on review for downgrade the ratings of the respective issuers following the announcement by Heta on 1 March that the Austrian Financial Market Authority (FMA) had issued a decree on resolution measures including a debt moratorium until the end of May 2016.

“The moratorium results in the immediate triggering of the statutory liability scheme for Pfandbriefbank (Oesterreich) AG which holds a significant amount of Heta debt,” said the rating agency. “Pfandbriefbank’s liabilities benefit from a statutory multi-recourse liability scheme by its member banks (the Landeshypothekenbanken), and their current or previous owners, the Austrian federal states.”

Hypo Tirol Bank’s mortgage and public sector covered bond programmes, rated Aa3 and Aa1, respectively, were put on review for downgrade. The TPI Leeway for guaranteed mortgage covered bonds is one notch, while for unguaranteed mortgage covered bonds it is zero notches, meaning a lowering of the covered bond anchor for the programme would trigger a downgrade of the covered bonds. The TPI Leeway for Hypo Tirol Bank public sector covered bonds is zero notches.

Vorarlberger Landes- und Hypothekenbank (Hypo Landesbank Vorarlberg) mortgage and public sector covered bond programmes, both rated Aaa, were also placed on review for downgrade. The TPI Leeway for Hypo Landesbank Vorarlberg’s mortgage covered bonds is one notch, while the TPI Leeway for its public sector covered bonds is two notches.

The mortgage and public sector covered bond programmes of Hypo NOE Gruppe Bank, both rated Aaa, were put on review. The TPI Leeways of the programmes are not published as the issuer is not rated by Moody’s.