Fitch upgraded the mortgage covered bonds of Alpha Bank from CCC+ to B- yesterday (Monday) on the back of an upgrade to the Greek issuer’s Viability Rating, while also affirming its B- ratings of the programmes of compatriots National Bank of Greece and Piraeus.

The rating agency upgraded the Viability Ratings (VRs) of Alpha Bank, National Bank of Greece (NBG) and Piraeus from f to ccc on Monday of last week (19 June), while affirming their Issuer Default Ratings (IDRs) at Restricted Default (RD), following a periodic review of the banks’ ratings.

The three banks’ IDRs were downgraded to RD in June 2015 following the imposition of restrictions on the withdrawal of deposits after large outflows from the banks in the first half of that year.

“The upgrade of the VRs reflects the banks’ improved liquidity and Fitch’s expectation that the completion of the second review of Greece’s third economic adjustment programme reduces political risks and will strengthen depositor and investor confidence in the Greek banking system,” said the rating agency.

The covered bond rating actions also follow a full periodic review of the programmes.

Fitch upgraded Alpha’s programme to B- and affirmed the mortgage covered bonds of Piraeus and NBG’s two programmes at B-. All the covered bond ratings are on stable outlook.

The covered bond ratings are capped by Greece’s Country Ceiling of B-.

Following the upgrade of the banks’ VRs, the ccc VRs are the starting point for Fitch’s analysis of the covered bond ratings.

Fitch noted that B- represents the rating floor for the programmes resulting from the VRs, as adjusted by IDR uplifts of two notches they are eligible for, and is achievable irrespective of programmes’ overcollateralisation (OC) levels.