Moody’s yesterday (Monday) upgraded its provisional rating of renewable energy covered bonds to be issued by NordLB Luxembourg Covered Bond Bank from Aa3 to Aa2, with NordLB CBB and Deutsche Hypo public sector issues also lifted thanks to an upgrade of NordLB and its subsidiaries.

Moody’s on Thursday upgraded by two notches the ratings of NordLB Luxembourg Covered Bond Bank (NordLB CBB) and Deutsche Hypothekenbank alongside Norddeutsche Landesbank (NordLB) following the announcement by the latter on 23 December of the successful completion of a capital strengthening by its public sector owners, which had earlier in the month been green-lighted by the European Commission.

Deutsche Hypothekenbank’s and NordLB CBB’s counterparty risk assessments (CRAs) were lifted from Baa2 to A3, and yesterday Moody’s upgraded NordLB CBB’s renewable energy covered bonds from (P)Aa3 to (P)Aa2, NordLB CBB’s public sector covered bonds from Aa2 to Aa3, and Deutsche Hypo’s public sector Pfandbriefe from Aa2 to Aa1. The Aa1 ratings of Deutsche Hypo mortgage covered Pfandbriefe and NordLB Pfandbriefe were affirmed.

Moody’s noted that the covered bond ratings are not constrained by its Timely Payment Indicator (TPI) framework and said it does not expect overcollateralisation to be maintained at levels consistent with higher ratings than the upgraded ones.

The renewable energy covered bonds have TPI Leeway of one notch, according to Moody’s, and the other programmes three notches.

NordLB CBB announced the mandate for the first issue of lettres de gage énergie renouvelables in October, with ABN Amro, Commerzbank, Crédit Agricole and NordLB as leads for the €300m no-grow short to medium maturity issue.