Moody’s yesterday (Wednesday) upgraded Polish covered bonds issued by ING, PKO and mBank, as well as Hungarian covered bonds issued by OTP and UniCredit, after changes to its country ceilings methodology raised the maximum possible ratings of issuance from the two countries.

Mortgage covered bonds issued by OTP Jelzalogbank and UniCredit Jelzalogbank in Hungary were upgraded from Baa1 to A2. In Poland, ING Bank Hipoteczny’s and PKO Bank Hipoteczny’s mortgage covered bonds were lifted from Aa3 to Aa1, while mBank Hipoteczny’s were upped from Aa3 to Aa2.

Apart from mBank’s covered bonds, the ratings are now constrained by new long term local currency country ceilings of A2 for Hungary and Aa1 for Poland.

The rating actions follow the announcement of changes to Moody’s country ceilings methodology on Monday. It raised 39 and lowered 15 local currency country ceilings, more than half by one notch, and raised 35 and lowered 25 foreign currency country ceilings, around half by one notch.

Moody’s said higher local currency ceilings generally reflect its assessment that governments, through their footprints and actions, pose lower risk to other issuers than previously estimated.

The rating of mBank Hipoteczny’s mortgage covered bonds is below the relevant country ceiling because, although the current level of overcollateralisation (OC) exceeds the minimum level consistent with Aa1 ratings, Moody’s does not expect OC to be maintained at levels consistent with ratings higher than Aa2.

OTP’s, UniCredit’s and PKO’s programmes now have two notches of TPI (Timely Payment Indicator) leeway, while ING’s and mBank’s have three notches of leeway.