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Fitch Affirms Slovenska Sporitelna's Mortgage Covered Bonds at 'A+'; Outlook Stable
April 28, 2017 / 11:25 AM / in 8 months

Fitch Affirms Slovenska Sporitelna's Mortgage Covered Bonds at 'A+'; Outlook Stable

(The following statement was released by the rating agency) FRANKFURT/LONDON, April 28 (Fitch) Fitch Ratings, Frankfurt/London, 28 April 2017: Fitch Ratings has affirmed Slovenska Sporitelna's (SLSP; A-/Stable/F1) mortgage covered bond programme at 'A+' with a Stable Outlook following the upgrade of the bank's Long-Term Issuer Default Rating (IDR) to 'A-' on 26 April 2017 (see 'Fitch Affirms Ceska and Komercni at 'A-', Upgrades Slovenska to 'A-'; Outlooks Stable' available on KEY RATING DRIVERS The 'A+' rating of SLSP's mortgage covered bonds is based on the bank's Long-Term IDR of 'A-', an updated IDR uplift of one notch (down from two previously) and a recovery uplift of one notch. The Stable Outlook on the mortgage covered bonds mirrors that on SLSP's Long-Term IDR of 'A-' and Slovakia's Long-Term IDR of 'A+'. IDR Uplift Slovak mortgage covered bonds are generally eligible for a maximum IDR uplift of two notches given their exemption from bail-in in a resolution scenario, Fitch's assessment that resolution of the issuer will not result in the direct enforcement of recourse against the cover pool, and the low risk of undercollateralisation at the point of resolution (see Fitch's Jurisdictional Analysis of the Risk of Undercollateralisation of Covered Bonds - Excel file). The IDR uplift for SLSP's mortgage covered bond programme has been revised to one notch (from two) as the bank's Long-Term IDR is now support-driven. This reflects Fitch's reassessment of SLSP's parent company's ability to provide support, following its upgrade in March 2017 (see 'Fitch Upgrades Erste Group Bank AG to 'A-'; Outlook Stable' available on Accordingly, Fitch upgraded SLSP's IDR to 'A-'/Stable from 'BBB+'/Stable and its Support Rating to '1' from '2', reflecting the extremely high probability of parental support. Payment Continuity Uplift (PCU) As SLSP's covered bonds are rated based on a limited rating uplift approach, Fitch does not assign a PCU. Fitch could not perform a full analysis as we are still in the process of forming assumptions for our credit analysis. Breakeven Overcollateralisation (OC) The legal minimum OC of 0% on a nominal basis is also the breakeven OC for the rating. Recovery Uplift The recovery uplift for SLSP's mortgage covered bonds is limited to a maximum of one notch based on the limited rating uplift approach applied. This notch was granted as no other cumulative risk factors, such as unhedged FX risk, exist. We expect that performance data provided by the issuer will allow a full and robust analysis and may lead to the assignment of an additional notch of recovery uplift in the future. RATING SENSITIVITIES Given Fitch's application of the limited rating uplift approach, the rating of the covered bonds is directly linked to Slovenska Sporitelna's rating. Changes to the bank's Long-Term IDR would be reflected in the covered bonds rating. Contact: Primary Analyst Vessela Krmnicek, CFA Director +49 69 758076 298 Fitch Deutschland GmbH Neue Mainzer Strasse 46-50 D-60311 Frankfurt am Main Secondary Analyst Thomas Kaber Associate Director +49 69 768076 172 Committee Chairperson Rebecca Holter Senior Director +49 69 768076 261 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: Additional information is available on Applicable Criteria Covered Bonds Rating Criteria (pub. 26 Oct 2016) 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. 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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. 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