Creditreform plans to unveil a covered bond rating methodology in the spring, according to a spokesperson for the German company, which is set to publish its first bank ratings in the coming weeks, as the asset class attracts a growing number of players.

Creditreform Rating AG, a member of the Creditreform Group, issues ratings for, among others, real estate, infrastructure, corporate debt and structured finance transactions. It began publishing unsolicited ratings of European governments this year, and currently assigns unpublished ratings to banks in order to add counterparty assessments to published ratings of their transactions.

A spokesperson at the rating agency told The CBR that it will begin publishing bank ratings – most of them unsolicited – in the coming weeks, and is also targeting the covered bond market.

“One of the next steps is doing ratings of covered bonds/Pfandbriefe,” she said. “We expect to issue our rating methodology for covered bonds/Pfandbriefe in spring 2017.”

The rating agency is currently advertising a role for a covered bond analyst.

Analysts at Commerzbank said that publishing covered bond ratings could help Creditreform ratings achieve ECB eligibility, for which the rating agency would need to rate a certain percentage of ECB-eligible securities.

“Similar to country and bank level, the agency first wants to start with unsolicited covered bond ratings for major issuers,” they added. “At the end of the day, however, it is likely to aim at mandates from tier two banks.

“Similar to Scope, Creditreform is likely to lack reach in the competition with larger names – irrespective of its ratings qualifying for CRR, CLR or Solvency II purposes.”

On 3 November the ECB announced exacting new transparency requirements that rating agencies must meet in order for their covered bond ratings to be accepted by the ECB for repo purposes, such as quarterly surveillance reports on covered bond programmes with tight deadlines, which rating agencies must adhere to from 1 July 2017.

Such standards “are likely to render the start on the covered bond market more difficult”, the Commerzbank analysts said.

“On balance, however, we regard the agencies’ growing interest in the covered bond market segment as positive,” the Commerzbank analysts added.

Other rating agencies are also targeting the sector, with Scope having assigned its first solicited covered bond ratings earlier this year and with names such as Kroll Bond Rating Agency eyeing the asset class.

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