Kommunalkredit Austria today (Thursday) launched a tender offer for up to Sfr200m of its remaining three Swiss franc covered bonds as part of a process of aligning its issuance with its cover pool. The wind-down of KA Finanz has meanwhile been accelerated.

Kommunalkredit Austria is inviting bondholders to tender, by 12 May, their Swiss franc covered bonds – due in 2020, 2022 and 2026 – for a total of up to Sfr200m (Eu185m).

“Through the tender offers, Kommunalkredit intends to realign the currency structure of the Swiss franc-denominated covered bonds and the predominantly euro-denominated cover pool,” the Austrian issuer said. “For future funding requirements, which may arise, Kommunalkredit intends to issue covered bonds, among other instruments.”

According to Kommunalkredit Austria data, Swiss franc covered bonds constituted Eu632m equivalent, and 73.6%, of its outstandings as of 31 March.

Moody’s cited an ongoing reduction in foreign currency risk as one factor behind an upgrade of Kommunalkredit Austria’s covered bonds from Baa3 to Baa2 on 17 March.

The run-off of the wind-down entity of the old Kommunalkredit Austria, KA Finanz, will be accelerated, according to a plan it announced on Wednesday of last week (26 April). It is seeking a refinancing facility from an Austrian government-owned entity (ABBAG) that will replace its current refinancing, with its run-off horizon envisaged to be shortened from a 2040 deadline to as early as within 10 years, it said. Outstanding bonds will be redeemed in full at their relevant due dates.