Berlin Hyp mortgage Pfandbriefe were upgraded from Aa1 to Aaa by Moody’s this (Friday) morning because the German issuer committed to Moody’s to maintain sufficient overcollateralisation to reach the higher rating, with an official at the issuer saying that the move was prompted by a change in investor thinking.

Moody’s said today that it upgraded the rating of the mortgage covered bonds after confirmation from the issuer that it will support the Pfandbriefe with overcollateralisation (OC) levels consistent with a Aaa rating, which it said is 9.5% on a present value basis.

Bodo Winkler, head of investor relations at Berlin Hyp, noted that the bank already holds OC of at least 23.5% for Fitch for the mortgage Pfandbriefe, which is necessary to achieve their AA+ rating. However, Moody’s did not take that into account, although it had been publicly disclosed.

Winkler said that a change in investor attitudes had prompted it to make the formal commitment and secure the upgrade to Aaa from Moody’s.

“In past years investors said that if you have a split rating they would take the worse rating,” he said. “But we have the feeling that since the financial crisis, with many sovereigns having been downgraded by one or the other rating agency, some investors say that if you have a split AAA and AA+ rating they will take the AAA rating.

“This means that if they have to have a AAA rating to invest in your bonds they can now do so, and that was one of the main drivers of our decision.”

Winkler also highlighted that the issuer had been assigned an issuer rating of A2 by Moody’s on Monday.

“It was important for us to have this in place and published so that investors can know how much TPI leeway we have, for example,” he said.

Moody’s assigns the mortgage Pfandbriefe a Timely Payment Indicator (TPI) of “high” and in combination with the A2 rating this means that they have a TPI leeway of two notches.