Moody’s upgraded six covered bond programmes of three Greek banks yesterday (Wednesday) by up to four notches, after a sovereign upgrade led to upgrades of the issuers. Moody’s also upgraded Alpha Bank Romania, while noting plans for a EUR200m covered bond in the first half of 2019.

National Bank of Greece (NBG) issuance off its Global Mortgage Covered Bonds programme – including its outstanding benchmark – were upgraded from Ba2 to Baa1, and issuance off its Mortgage Covered Bonds 2 programme from Ba2 to Baa3.

Covered bonds issued off Alpha Bank AE’s two programmes were upgraded from Ba2 to Ba1. Eurobank Ergasias programme 1 covered bonds – including its outstanding benchmark – were lifted from Ba2 to Baa2, and those issued off programme 2 from Ba2 to Ba1.

The Greek country ceiling was lifted from Ba2 to Baa1 in conjunction with an upgrade of the sovereign from B3 to B1 on Friday. NBG, Alpha Bank and Eurobank Ergasias were upgraded on Tuesday, with their counterparty risk assessments (CRAs) being raised from B3 to B2.

“Today’s rating action on Greek banks was primarily driven by the improving economic conditions and more benign operating environment,” said Moody’s. “The revised bank ratings and outlooks also reflect Moody’s expectation for further improvements in banks’ underlying financial fundamentals through lower level of problem loans, increasing customer deposits and gradual enhancement of their weak profitability.

“The rating agency said that the improvement in the operating environment fundamentally translates banks’ financials being more compatible with a higher rating level.”

NBG’s Global programme rating is now constrained by the country ceiling and the Timely Payment Indicator (TPI) of Probable-High. Eurobank Ergasias’s programme 1 could achieve a Baa1 rating under the TPI framework, but the “committed” overcollateralisation (OC) is only consistent with a Baa2 covered bond rating, Moody’s said.

The rating of NBG programme 2 covered bonds is constrained by their TPI of Probable, and the other three programmes’ ratings are constrained by their TPIs of Very Improbable.

Moody’s also upgraded Alpha Bank Romania yesterday, lifting its deposit ratings from Ba3 to Ba2, on the back of the upgrade of parent Alpha Bank AE. Its CRA was raised from Ba2 to Ba1.

The rating agency said it had incorporated into its analysis a planned EUR200m covered bond that Alpha Bank Romania expects to complete in the first half of the year, noting that the secured funding did not prevent the bank enjoying a two notch uplift from its new BCA to the deposit ratings.

The bank in December announced its plans for what is expected to be the first Romanian covered bond.