Dexia Kommunalbank Deutschland

Standard & Poor’s has put public sector covered bonds issued by Dexia Kommunalbank Deutschland on CreditWatch negative after downgrading Dexia Crédit Local’s rating and leaving it on review for downgrade.

Dexia Kommunalbank’s public sector Pfandbriefe are rated AAA, incorporating seven notches of uplift from Dexia Crédit Local’s BBB+ issuer rating, which is the maximum possible under S&P’s methodology. The rating agency said that it had put the covered bonds on review for downgrade because Dexia Crédit Local’s rating, cut from A-, remains on CreditWatch negative and any further downgrade would result in an automatic downgrade of the covered bonds.

Dexia Kommunalbank’s covered programme has been assigned to Category 1 under S&P’s methodology and is considered to have “low” asset-liability mismatch (ALMM).