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Fitch Revises Outlook on Greek CVBs; Maintains Cypriot CVBs on RWN on Criteria Amendments
April 1, 2014 / 5:12 PM / 4 years ago

Fitch Revises Outlook on Greek CVBs; Maintains Cypriot CVBs on RWN on Criteria Amendments

(The following statement was released by the rating agency) MILAN/LONDON, April 01 (Fitch) Fitch Ratings has revised the Outlooks on four Greek covered bond programmes to Positive and another to Stable. The ratings of the five covered bonds programmes have also been affirmed. At the same time, the agency is maintaining the rating of one Cypriot covered bond programme on Rating Watch Negative (RWN). These rating actions follow the implementation of the agency's revised Covered Bonds Rating Criteria dated 10 March 2014 on programmes issued by Greek and Cypriot banks. As part of its updated covered bonds analysis, the agency has assigned IDR uplift to each programme, where applicable. KEY RATING DRIVERS The rating of the mortgage covered bonds issued by Alpha Bank A.E. (Alpha, B-/Stable/B) has been affirmed at 'B' and the Outlook has been revised to Positive from Negative. The change in the Outlook indicates the potential for a rating upgrade based on the bank's IDR of 'B-', an IDR uplift of '1', an unchanged Discontinuity Cap (D-Cap) of '3' (moderate high discontinuity risk) and the asset percentage (AP) that Fitch takes into account in its analysis and which provides more protection than the breakeven AP for a?B rating. The rating of the mortgage covered bonds issued by Eurobank Ergasias S.A. (Eurobank, B-/Stable/B) has been affirmed at 'B' and the Outlook has been revised to Positive from Negative. The change in the Outlook indicates the potential for a rating upgrade based on the bank's IDR of 'B-', an IDR uplift of '1', an unchanged D-Cap of '0' (full discontinuity risk) and the AP that Fitch takes into account in its analysis, and which provides more protection than the breakeven AP for a 'B' rating. The rating of the mortgage covered bonds Programme I issued by National Bank of Greece S.A. (NBG, B-/Stable/B) has been affirmed at 'B+' and the Outlook has been revised to Stable from Negative. The change in the Outlook indicates that, although there is the potential for a rating upgrade based on the bank's IDR of 'B-', an IDR uplift of '1', an unchanged D-Cap of '0' (full discontinuity risk) and the AP that Fitch takes into account in its analysis and which provides more protection than the breakeven AP for a 'B+' rating, the rating of NBG Programme I is constrained by the Country Ceiling of the Greek sovereign, which is currently at 'B+'. The rating of the mortgage covered bonds Programme II issued by NBG has been affirmed at 'B' and the Outlook has been revised to Positive from Negative. The change in the Outlook indicates the potential for a rating upgrade based on the bank's IDR of 'B-', an IDR uplift of '1', an unchanged D-Cap of '3' (moderate high discontinuity risk) and the AP that Fitch takes into account in its analysis and which provides more protection than the breakeven AP for a 'B' rating. The rating of the mortgage covered bonds issued by Piraeus Bank S:A. (Piraeus, B-/Stable/B) has been affirmed at 'B' and the Outlook has been revised to Positive from Negative. The change in the Outlook indicates the potential for a rating upgrade based on the bank's IDR of 'B-', an IDR uplift of '1', an unchanged D-Cap of '3' (moderate high discontinuity risk) and the AP that Fitch takes into account in its analysis and which provides more protection than the breakeven AP for a 'B' rating. The 'B' rating of the mortgage covered bonds issued by Bank of Cyprus Public Company Ltd (BoC; IDR 'Restricted Default', RD) has been maintained on RWN although the covered bond programme benefits from an IDR uplift of '1'. The RWN reflects the uncertainty around the direction of the bank's IDR and the impact of the current difficult economic environment on the performance of the residential mortgage portfolio. The IDR uplift expresses Fitch's judgement of the degree of protection in the event of a bank's resolution that would be available to prevent the source of covered bonds payments switching from the issuer to the cover pool. It is derived from the following factors: Fitch's opinion of the relative ease and motivations for resolution methods other than liquidation, the importance of covered bonds to the financial markets in a given jurisdiction and the extent of buffer offered by senior unsecured debt. Fitch's view on the use of resolution methods other than liquidation contributes to the IDR uplift assigned to the Greek and Cypriot programmes based on their large size in their domestic market. RATING SENSITIVITIES The 'B'/Positive rating of the mortgage covered bonds issued by Alpha, Eurobank, NBG Programme II and Piraeus may be upgraded once the Bank Recovery and Resolution Directive is passed by the European Parliament and provided the AP that Fitch relies upon in its analysis is commensurate with the breakeven level for the new rating. The 'B+'/Stable rating of the mortgage covered bonds Programme I issued by NBG may be affected by changes to the Country Ceiling of the Greek sovereign. The rating of NBG Programme I would be vulnerable to downgrade if NBG's IDR is downgraded by two or more notches. The 'B'/RWN rating of the mortgage covered bonds issued by BoC may be affected by changes to BoC's IDR. The rating of the covered bonds is also vulnerable to a deterioration of the performance of the residential mortgage portfolio. Additionally, should Cyprus's Country Ceiling be downgraded below 'B', the covered bonds rating may be downgraded. Contact: Primary Analyst Paolo Sala (Alpha, Eurobank, NBG Programme I, NBG Programme II, Piraeus, BoC) Analyst +39 02 87 90 87 292 Fitch Italia S.p.a. Via Privata Maria Teresa, 8 Milan, 20123 Secondary Analysts Anastasiya Kapustina (Alpha, Eurobank, NBG Programme I, NBG Programme II, Piraeus) Analyst +44 20 3530 1516 Roberto Del Ragno (BoC) Analyst +39 02 87 90 87 206 Committee Chairperson Federica Fabrizi Senior Director +39 02 87 90 87 232 Media Relations: Christian Giesen, Frankfurt am Main, Tel: +49 69 768076 232, Email: christian.giesen@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Covered Bonds Rating Criteria', dated 10 March 2014, 'Counterparty Criteria for Structured Finance and Covered Bonds', dated 13 May 2013, 'Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum', dated 13 May 2013, 'EMEA Residential Mortgage Loss Criteria', dated 6 June 2013, 'EMEA RMBS Master Rating Criteria' dated 6 June 2013, 'EMEA Criteria Addendum - Greece', dated 25 July 2013, 'Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds', dated 23 January 2014 and 'Covered Bonds Rating Criteria - Mortgage Liquidity and Refinancing Stress Addendum', dated 4 February 2014 are available at www.fitchratings.com. Applicable Criteria and Related Research: Covered Bonds Rating Criteria here Covered Bonds Rating Criteria – Mortgage Liquidity and Refinancing Stress Addendum here Counterparty Criteria for Structured Finance and Covered Bonds here Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum here EMEA Residential Mortgage Loss Criteria here EMEA RMBS Master Rating Criteria here EMEA Criteria Addendum – Greece here Criteria for Interest Rate Stresses in Structured Finance Transactions here Additional Disclosure Solicitation Status 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 WEBSITE '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. 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.

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