Reuters logo
Fitch Upgrades 1 Greek Covered Bond Programme; Affirms 3 Others
June 26, 2017 / 3:57 PM / 3 months ago

Fitch Upgrades 1 Greek Covered Bond Programme; Affirms 3 Others

(The following statement was released by the rating agency) MILAN/LONDON, June 26 (Fitch) Fitch Ratings has taken rating actions on four Greek covered bonds programmes issued by Alpha Bank AE (Alpha, RD/RD/ccc), National Bank of Greece S.A. (NBG, RD/RD/ccc) and Piraeus Bank S.A. (Piraeus, RD/RD/ccc) as follows: - Alpha's mortgage covered bonds upgraded to 'B-' from 'CCC+'; Stable Outlook assigned - NBG's mortgage covered bonds Programme I (NBG I) affirmed at 'B-'; Outlook Stable - NBG's mortgage covered bonds Programme II (NBG II) affirmed at 'B-'; Outlook Stable - Piraeus's mortgage covered bonds affirmed at 'B-'; Outlook Stable The rating actions follow the upgrade of the Viability Ratings (VR) of Alpha, NBG and Piraeus to 'ccc' from 'f' on 19 June 2017 (see Fitch Affirms Greek Banks' IDRs at RD; Upgrades VRs available at www.fitchratings.com) and the full periodic review of the programmes. KEY RATING DRIVERS Country Ceiling and VRs The ratings of the covered bonds issued under the programmes are capped by Greece's Country Ceiling of 'B-'. At the same time, the 'B-' represents the rating floor for the programmes resulting from the VRs, as adjusted by the Issuer Default Rating (IDR) uplifts, and it is achievable irrespective of the levels of over-collateralisation (OC). Following the upgrade of the banks' VRs to 'ccc' from 'f', the starting point for the analysis is the 'ccc' VR in accordance with Fitch's Covered Bonds Rating Criteria. IDR Uplift Greek covered bonds are eligible for a maximum IDR uplift of two notches. The unchanged IDR uplift of two notches reflects that the issuers' Long-Term IDRs are not support-driven (neither institutional nor by the sovereign) as well as a low risk of under-collateralisation at the point of resolution. This is based on Fitch's assessment on the Greek legal framework, the presence of an asset monitor, asset eligibility criteria and minimum legal and contractual levels of OC, as applicable. Payment Continuity Uplift (PCU) The PCU is unchanged for all the programmes: six notches for NBG I and eight notches for NGB II, Alpha's and Piraeus's programmes due to the structural mechanisms that are in place to protect against cash flow mismatches between assets and liabilities. While NBG I has a soft bullet amortisation profile of the liabilities with a 12-months principal maturity extension, NGB II, Alpha and Piraeus covered bonds envisage a conditional pass-through feature that implies the covered bonds can amortise in line with the cover assets upon the extension of their principal maturity date. Moreover, each programme includes a liquidity reserve that covers at least three-month interest due on the covered bonds and senior expenses. Recovery Uplift The covered bonds are eligible for a recovery uplift as they are secured by standard Greek residential mortgage loans and therefore capable of generating at least good recovery prospects. NBG I, NBG II and Piraeus's programme are assigned a three-notch recovery uplift as the 25% OC Fitch relies on compensates for credit losses modelled in a stress scenario corresponding to the covered bonds' rating (7%, 14% and 14.3%, respectively). Alpha programme is assigned a one-notch recovery uplift as its relied-upon OC of 5.26% does not offset the 8.4% credit loss in the 'B-' rating scenario. The PCU and recovery uplift assigned to each covered bond programme are not a driver of the covered bonds ratings, as they are constrained by the 'B-' sovereign Country Ceiling. ALPHA Alpha's covered bonds are rated 'B-', two notches above the bank's VR of 'ccc'. This is based on an unchanged IDR uplift of two notches, an unchanged PCU of eight notches and a recovery uplift of one notch. The maximum legal asset percentage (AP) of 95% (5.26% equivalent OC) which Fitch relies upon in its analysis is in line with the 'B-' breakeven AP. The agency has assigned a Stable Outlook to Alpha's covered bonds, reflecting a stable cover pool composition. NBG NBG I and NBG II covered bonds are rated 'B-', two notches above the bank's VR of 'ccc', based on an unchanged IDR uplift of two notches, an unchanged PCU of six and eight notches, respectively, and a recovery uplift of three notches. The 80% contractual AP of both programmes (25% equivalent OC) which Fitch relies upon in its analysis provides more protection than the 95% 'B-' breakeven AP. The Stable Outlook on the covered bonds reflects a stable cover pool composition and the cushion provided by the committed OC against the 95% 'B-' breakeven AP. PIRAEUS Piraeus' covered bonds are rated 'B-', two notches above the bank's VR of 'ccc'. This is based on an unchanged IDR uplift of two notches, an unchanged PCU of eight notches and a recovery uplift of three notches. The contractual AP of 80% which Fitch relies upon in its analysis provides more protection than the 95% 'B-' breakeven AP. The Stable Outlook on the covered bonds reflects a stable cover pool composition and the cushion provided by the committed OC against the 95% 'B-' breakeven AP. RATING SENSITIVITIES Changes in Greece's Country Ceiling could affect the rating of all Greek covered bonds programmes. In particular and all else being equal, a higher sovereign Country Ceiling would trigger an upgrade by one notch for all programmes, factoring in the good recovery prospects, irrespective of the level of Fitch's relied-upon over-collateralisation. If the Country Ceiling is upgraded by two notches or more, the covered bond ratings could be upgraded correspondingly as long as the relied-upon OC of each programme is enough to compensate for the stresses commensurated with the Country Ceiling level. Alpha Bank AE's covered bonds ratings are vulnerable to a one-notch downgrade if the bank's VR is downgraded to 'cc' or below, all else being equal. Contact: Primary Analysts Sara De Novellis (Alpha, Piraeus) Analyst +39 02 879 087 295 Fitch Italia S.p.A. Via Morigi 6, 20123 Milan Alessandro Bosello (NBG I and NBG II) Analyst +39 02 879 087 278 Fitch Italia S.p.A. Via Morigi 6, 20123 Milan Secondary Analysts Alessandro Bosello (Alpha, Piraeus) Analyst +39 02 879 087 278 Roberto Del Ragno (NBG I and NBG II) Director +39 02 879 087 206 Committee Chairperson Juan David Garcia Senior Director +34 917 025 774 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: athos.larkou@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Covered Bonds Rating Criteria (pub. 26 Oct 2016) here Criteria Addendum: Greece (pub. 28 Apr 2017) here Criteria for Country Risk in Global Structured Finance and Covered Bonds (pub. 26 Sep 2016) here EMEA RMBS Rating Criteria (pub. 29 Nov 2016) here Fitch's Interest Rate Stress Assumptions for Structured Finance and Covered Bonds - Excel File (pub. 17 Feb 2017) here Global Bank Rating Criteria (pub. 25 Nov 2016) here Global Structured Finance Rating Criteria (pub. 03 May 2017) here Structured Finance and Covered Bonds Counterparty Rating Criteria (pub. 23 May 2017) here Structured Finance and Covered Bonds Interest Rate Stresses Rating Criteria (pub. 17 Feb 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below