Moody’s upgraded covered bonds issued off The Co-operative Bank’s Moorland mortgage covered bond programme from A3 to A2 yesterday (Wednesday), after having upgraded the UK financial institution’s Counterparty Risk (CR) assessment from B1 to Ba3.

The rating agency raised The Co-op’s CR assessment – and its Counterparty Risk Rating (CRR) from B2 to B1 – on Monday, reflecting the issuance of £200m (€221m) of senior unsecured notes on 27 November and concluding a review initiated earlier in the month.

“The issuance of the bond provides a higher subordination for the counterparty obligations, contractual commitments and operating obligations of The Co-operative Bank,” said Moody’s. “This would lead to a lower loss-given-failure for these obligations, and a higher notching for the long term CR Assessment and long-term CRR under Moody’s Loss Given Failure (LGF) analysis.”

The issuer has one covered bond outstanding, a November 2021 sterling deal issued in 2011 for £600m, of which £483.107m is outstanding, according to the Co-op’s latest FCA Regulated Covered Bonds Register filing.