Moody’s upgraded 11 German Pfandbrief programmes from an aggregate seven issuers yesterday (Tuesday) after the assignment of Counterparty Risk (CR) assessments to the relevant issuers lifted their covered bond anchors.

Yesterday’s upgrades followed Moody’s rating actions on several German banking groups and nine public sector banks on Friday that, as part of the implementation of the agency’s new bank rating methodology, assigned each a CR assessment, which is the new reference point for covered bond anchors.

For most of the banks, this resulted in covered bond anchors that were higher than the previous ones. Accordingly, Moody’s ratings of 11 covered bond programmes from seven German issuers have been upgraded by up to two notches.

The ratings of Berlin Hyp’s public sector Pfandbriefe and UniCredit Bank’s and Deutsche Kreditbank’s public and mortgage programmes are now rated Aaa, having been upgraded from Aa1.

Moody’s said that the new covered bond anchors and their Timely Payment Indicators do not restrict the ratings of Deutsche Hypothekenbank’s and Hypothekenbank Frankfurt’s mortgage and public sector programmes below Aaa, but noted the programmes’ overcollateralisation levels are insufficient for Aaa ratings.

The full list of upgrades is:

- Berlin Hyp: public sector covered bonds upgraded from Aa1 to Aaa, with an A1 CR

- Deutsche Hypothekenbank: mortgage and public sector covered bonds upgraded from Aa2 to Aa1, with an A2 CR

- Deutsche Kreditbank: mortgage and public sector covered bonds upgraded from Aa1 to Aaa, CR unpublished

- Hypothekenbank Frankfurt: mortgage covered bonds upgraded from A1 to Aa2 and public sector covered bonds upgraded from Aa3 to Aa1, with an A3 CR

- HSH Nordbank: ship covered bonds upgraded from Baa2 to Baa1, with a Baa3 CR

- NordLB: aircraft mortgage covered bonds upgraded from A1 to Aa3, with an A2 CR

- UniCredit Bank: mortgage and public sector covered bonds upgraded from Aa1 to Aaa, with an A1 CR

Florian Eichert, head of covered bond and SSA research at Crédit Agricole, noted that the upgrades have little impact on the regulatory treatment of the programmes, except in the case of NordLB.

He said the issuer’s aircraft Pfandbriefe are now eligible for Level 1B LCR, as their rating has moved into double-A territory and the LCR does not require CRR compliance. He said the risk weight will remain unchanged at 20%, as the collateral is not in line with CRR requirements.