Moody’s confirmed at Aa2 CIF Euromortgage covered bonds yesterday (Wednesday) after having confirmed its rating of the issuer’s sponsor bank, 3CIF, the previous day because of the enactment of a temporary state guarantee allowing the French bank to meet its obligations.

Moody’s confirmed the rating of Caisse Centrale du Credit Immobilier de France (3CIF), the funding entity of the Credit Immobilier de France (CIF) group, at Baa2 with a stable outlook. The rating action followed a vote by the French parliament and subsequent enactment by the country’s president of a temporary guarantee, of up to six months, that will allow CIF to meet all of its obligations.

The affirmation of the senior unsecured rating prompted Moody’s to confirm at Aa2 obligations foncières issued by CIF Euromortgage.

The rating agency expects the European Commission (EC) to approve the temporary guarantee, thereby allowing it to become permanent, which will trigger the run-off of the bank.

CIF is unable to obtain market funding on an unsecured, unguaranteed basis, said Moody’s, and plans to repay its outstanding liabilities as they come due with a combination of cashflow generated from existing on-balance sheet assets, and proceeds from state guaranteed debt issuance.

The state guarantee encompasses new issuance of unsecured debt up to a maximum amount of Eu16bn, in addition to Eu12bn to cover intra-group obligations of 3CIF. The guarantee does not explicitly include current outstanding senior unsecured debt, said the rating agency, although the ability of 3CIF to issue guaranteed debt to manage asset-liability mismatches so as to meet its obligations indirectly supports existing bondholders.

The long term debt and deposit ratings of 3CIF incorporate 11 notches of systemic support.