Fitch upgraded four Greek covered bond programmes – of Alpha Bank, National Bank of Greece (NBG) and Piraeus – by one notch to B today (Wednesday), after revising the sovereign’s country ceiling last week.

The rating agency upgraded the Greek sovereign’s Issuer Default Rating (IDR) from CCC to B- and revised the country ceiling from B- to B on Friday. The rating agency cited reduced political risk and sustained economic growth in the country.

“Fitch believes that general government debt sustainability will steadily improve, underpinned by ongoing compliance with the terms of the European Stability Mechanism (ESM) programme, and reduced political risk, sustained GDP growth and additional fiscal measures legislated to take effect through 2020,” it said.

“The successful completion of the second review of Greece’s ESM programme reduces risks that the economic recovery will be undermined by a hit to confidence or by the government building up arrears with the private sector.”

Driven by the raised country ceiling, Fitch upgraded the ratings of Alpha, Piraeus and NBG Programme I and Programme II covered bonds from B- to B. The ratings of NBG and Piraeus’s covered bonds are on positive outlook and Alpha’s on stable outlook.

Fitch added that the ratings of NBG and Piraeus’s covered bonds are capped by the B country ceiling. It said the positive outlook on the programmes reflects strong protection offered by their 25% minimum contractual overcollateralisation (OC), which the agency views as sufficient to sustain stresses above the B rating. The stable outlook on Alpha’s covered bonds is driven by its minimum OC of 5.26%, which Fitch deems insufficient to compensate stresses under higher rating scenarios.

Last month the Hellenic Republic issued its first international bond in more than three years and a National Bank of Greece official told The CBR the bank is considering covered bond issuance amid plans to return to the capital markets.