fitch revises polish covered bonds

FITCH REVISES POLISH COVERED BONDS' RATING
OUTLOOKS FOLLOWING CRITERIA AMENDMENTS
Fitch Ratings-London/Frankfurt-07 April 2014: Fitch Ratings has revised Pekao Bank Hipoteczny
SA's (PBH) mortgage covered bond programme Outlook to Positive from Stable and revised mBank
Hipoteczny`s SA's (mBH) public sector and mortgage covered bond programmes Rating Outlook to
Negative from Stable.
These rating actions follow the implementation of the agency's revised Covered Bonds Rating Criteria
dated 10 March 2014 at www.fitchratings.com to programmes issued by Polish banks. It also takes
into account the Negative Outlooks on banks' Issuer Default Ratings (IDR) announced by Fitch
on 28 March 2014 (see "Fitch Revises Outlook of 6 CEE Subsidiaries of Erste, Societe Generale
and Commerzbank to Negative" at www.fitchratings.com) . As part of its updated covered bonds
analysis, the agency has assigned an IDR uplift to each programme, where applicable. The full list
of ratings and IDR uplifts for Polish covered bonds is shown at the end of this comment.
KEY RATING DRIVERS
The Outlook on the 'A' rating of the mortgage covered bonds issued by PBH has been revised to
Positive from Stable to indicate the potential for a rating upgrade based on the bank's IDR of 'A-/
Stable', an IDR uplift of 1 and an unchanged Discontinuity Cap (D-Cap) of 0 (full discontinuity risk).
The rating on PBH's mortgage covered bonds rating of 'A' has been affirmed.
The Outlook on the 'A' rating of the public sector and the 'A' rating of the mortgage covered bonds
issued by mBH has been revised to Negative from Stable due to the Negative Outlook on the bank's
IDR of 'A' and the fact that a potential downgrade of the IDR may not be entirely compensated as no
IDR uplift has been assigned to these programme. The ratings on mBH's public sector and mortgage
covered bonds have been affirmed at 'A'.
The IDR uplift expresses Fitch's judgement regarding 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 regarding 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 mortgage covered bond programme of PBH based on their large size in their domestic
market.
RATING SENSITIVITIES
The 'A'/Positive rating of PBH`s mortgage covered bonds may be upgraded once the Bank Recovery
and Resolution Directive is passed by the European Parliament and provided the overcollateralization
that Fitch relies upon in its analysis is commensurate with the breakeven level for the new rating.
The 'A'/Negative rating of mBH public sector and mortgage covered bonds may be downgraded if,
among other factors, the bank's 'A/Negative' IDR was downgraded by one or more notches.
The rating and IDR uplift for each programme are as follows:
Pekao Bank Hipoteczny SA, mortgage covered bonds, 'A'/Positive, IDR Uplift: 1
mBank Hipoteczny SA, mortgage covered bonds, 'A'/Negative, IDR Uplift: 0
mBank Hipoteczny SA, public sector covered bonds, 'A'/Negative, IDR Uplift: 0
Contact:
Primary Analyst
Martin Kuhn
Associate Director
+69 768076 132
Fitch Deutschland GmbH
Taunusanlage 17
60325 Frankfurt am Main
Secondary Analyst
Mathias Pleissner
Director
+49 69 768076 133
Committee Chairperson
Rebecca Holter
Senior Director
+49 69 768076 261
Media Relations: Christian Giesen, Frankfurt am Main, Tel: +49 69 768076 232, Email:
[email protected].
Additional information is available at www.fitchratings.com.
Applicable criteria: 'Covered Bonds Rating Criteria ', dated 10 March 2014 is available at
www.fitchrating.com.
Applicable Criteria and Related Research:
Covered Bonds Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=738975
ALL
FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS
AND
DISCLAIMERS.
PLEASE
READ
THESE
LIMITATIONS
AND
DISCLAIMERS
BY
FOLLOWING
THIS
LINK:
HTTP://FITCHRATINGS.COM/
UNDERSTANDINGCREDITRATINGS. 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.

Download Report