Moody’s upgraded the mortgage covered bonds of Hamburg Commercial Bank (HCOB) from Aa2 to Aa1 yesterday (Tuesday) and its ship covered bonds from A3 to A2, following a one notch upgrade of the issuer’s counterparty risk (CR) assessment.

Moody’s yesterday upgraded the German issuer, formerly HSH Nordbank, from Baa2 to Baa1 and its CR assessment from Baa2 (cr) to Baa1 (cr).

The rating agency said the upgrade reflects the bank’s strengthened solvency profile as of year-end 2020 on the back of sustained progress towards meeting its overall transformation plan targets for the final assessment of its application as a full member by the German private banks’ deposit guarantee scheme.

“The bank concluded a drastic deleveraging of its balance sheet, which resulted in a significant enhancement of its capitalisation and asset quality, and is on track to establish a meaningfully improved profitability prior to cost of risk,” Moody’s added.

HCOB’s upgrade prompted the upgrade of its Hypothekenpfandbriefe to Aa1 and Schiffspfandbriefe to A2.

Moody’s assigns timely payment indicators (TPIs) of “high” and “improbable” to HCOB’s mortgage and ship Pfandbriefe, respectively, and noted that the TPI framework does not constrain the ratings.