Moody’s has cut NordLB’s aircraft Pfandbriefe from Aa3 to A1, following a downgrade of the German bank last week prompted by its exposure to the shipping industry and intention to acquire full ownership of subsidiary BremerLB.

The rating agency downgraded NordLB’s Counterparty Risk (CR) assessment from A2 to A3. The covered bond anchor for the aircraft covered bonds (Flugzeugpfandbriefe) is the CR assessment plus one notch.

“We give limited value to the collateral, therefore the covered bonds are rated one notch above the covered bond anchor” Moody’s said on Monday. “As a result, the downgrade of the CR assessment by one notch leads to a downgrade of the covered bonds by one notch.”

The cover pool losses for the programme are 70.9%, according to Moody’s analysis, split between market risk of 3.9% and collateral risk of 67.0%. The collateral score is 100%.

The programme now has a TPI (Timely Payment Indicator) leeway of three notches, Moody’s said.

NordLB is the only issuer to have sold aircraft covered bonds in benchmark format.