Raiffeisenlandesbank Oberösterreich (RLB OÖ) is set to issue rated covered bonds for the first time, with the Austrian bank having been assigned a provisional Aaa rating by Moody’s for its mortgage-backed covered bonds.

RLB OÖ has previously issued covered bonds, but without a rating. As of 31 January, the issuer had Eu394m of mortgage covered bonds outstanding and Eu970m of public sector covered bonds, according to an issuer presentation.

Moody’s today (Thursday) assigned a provisional Aaa rating to mortgage-backed covered bonds issued by RLB OÖ. It rates the Austrian issuer Baa2, on stable outlook.

Moody’s noted that as of 8 February, the total value of the assets included in the cover pool for the mortgage programme is approximately Eu1.2bn, comprising residential mortgage loans (53.9%), commercial mortgage loans (42.3%) and promoted housing mortgage loans (3.8%). The programme is backed primarily by residential and commercial mortgage loans originated in Austria, and that the collateral score for the cover pool is 8.0%.

The residential loans have a weighted-average (WA) seasoning of 25 months and a WA loan-to-value (LTV) ratio of 70.0%, according to Moody’s, while the commercial loans have a WA seasoning of 32 months and a WA LTV ratio of 62.2%.

Moody’s said that based on an expected total issuance volume of Eu894m – including Eu500m of expected issuance – the overcollateralisation (OC) in the cover pool will be about 37.1% on a nominal value basis, of which the issuer provides 0% on a committed basis. The minimum OC level consistent with the Aaa rating is 19.0%. Moody’s added that its cover pool analysis also considers exposure to market risk, which is 19.9%.

The bonds are assigned a TPI of “probable”, which Moody’s noted is in line with other Austrian mortgage-backed programmes. Moody’s said the TPI Leeway for is therefore zero notches, meaning it might downgrade the covered bonds because of a TPI cap if it lowers the covered bond anchor by one notch, all else being equal.

Photo: RLB OÖ