TEXT - S&P affirms Westdeutsche Immobank mortgage covered bonds

Fri Jan 11, 2013 2:15pm EST

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(The following statement was released by the rating agency)

OVERVIEW
     -- We have completed our review of Westdeutsche ImmobilienBank's 
mortgage-covered bond program under our updated covered bond counterparty 
criteria and we have concluded that account bank and commingling risks are now 
sufficiently covered.
     -- We are therefore affirming our 'AA/A-1+' ratings on the program and 
related series and removing them from CreditWatch negative. 
     -- The stable outlook reflects that on the issuer credit rating and the 
expected development of the asset-liability mismatch within the next 12 months.
 
FRANKFURT (Standard & Poor's) Jan. 11, 2013--Standard & Poor's Ratings 
Services said today it had affirmed its 'AA' long-term and 'A-1+' short-term 
ratings on the mortgage-covered bond program of Germany-based Westdeutsche 
ImmobilienBank (WIB; BBB-/Stable/A-3). The ratings were removed from 
CreditWatch, where they were placed with negative implications on July 12, 
2012. The outlook is stable.

Today's rating action follows our review of the program's credit and cash flow 
information as of Sept. 30, 2012, and the implementation of our updated 
counterparty criteria framework (see "Counterparty Risk Framework Methodology 
And Assumptions," published Nov. 29, 2012, and "Covered Bonds Counterparty And 
Supporting Obligations Methodology And Assumptions," published May 31, 2012). 
We had identified account bank risk and commingling risk as relevant for this 
program.

Under our updated counterparty criteria we regard the account bank risk and 
commingling risk to be mitigated by a weak link to Zuercher Kantonalbank 
(AAA/Negative/A-1+) and the German National Bank (Bundesbank), two of WIB's 
account banks. As long as we believe Germany unlikely to exit the eurozone 
(European Economic And Monetary Union), we consider the Bundesbank's credit 
standing to be indistinguishable from that of the European Central Bank 
(AAA/Stable/A-1+). The weak link does not remove account bank and commingling 
risk, but instead creates a link between the rating on the covered bonds and 
that on the account bank (see "Assessing Credit Quality By The Weakest Link," 
published Feb. 13, 2012).

Based on the information available, we believe that the remaining account bank 
and commingling risks are now sufficiently covered, allowing a seven-notch 
rating uplift above the 'BBB-' issuer credit rating on WIB according to our 
criteria (see our five-step approach for rating covered bonds in "Revised 
Methodology And Assumptions For Assessing Asset-Liability Mismatch Risk In 
Covered Bonds," published on Dec. 16, 2009). In addition, the committed 
increase in overcollateralization to approximately 34% exceeds the target 
credit enhancement of 32.60%, including the amount subject to the remaining 
commingling and account bank risk. This leads us to believe that WIB's 
mortgage cover pool can support a 'AA' rating. 

The stable outlook reflects the stable rating outlook on the issuer and the 
expected development of the asset-liability mismatch within the next 12 months.

RELATED CRITERIA AND RESEARCH  

     -- Covered Bond Ratings Framework: Methodology And Assumptions, June 26, 
2012
     -- Counterparty Risk Framework Methodology And Assumptions, May 31, 2012
     -- Covered Bonds Counterparty And Supporting Obligations Methodology And 
Assumptions, May 31, 2012
     -- Assessing Asset-Liability Mismatch Risk In Covered Bonds: Revised 
Methodology And Assumptions For Target Asset Spreads, April 24, 2012
     -- European Structured Finance Scenario And Sensitivity Analysis: The 
Effects Of The Top Five Macroeconomic Factors, March 14, 2012
     -- Assessing Credit Quality By The Weakest Link, Feb. 13, 2012 
     -- Global Structured Finance Scenario And Sensitivity Analysis: The 
Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011
     -- Principles Of Credit Ratings, Feb. 16, 2011
     -- Methodology: Credit Stability Criteria, May 3, 2010
     -- Revised Methodology And Assumptions For Assessing Asset-Liability 
Mismatch Risk In Covered Bonds, Dec. 16, 2009
     -- Use Of CreditWatch And Outlooks, Sept. 14, 2009
     -- Update To The Criteria For Rating German Residential Mortgage-Backed 
Securities, Jan. 6, 2009
     -- German Law Change Affects Mortgage Foreclosure Period Stresses, Nov. 
28, 2008
     -- European Legal Criteria For Structured Finance Transactions, Aug. 28, 
2008
     -- A Listing Of S&P's New Actions Aimed At Strengthening The Ratings 
Process, Feb. 7, 2008
     -- Australia and New Zealand RMBS: Analyzing Credit Quality, Feb. 21, 2007
     -- Rating Pfandbriefe--The Analytical Perspective, April 8, 2004
     -- German Pfandbrief Framework Further Improved, March 30, 2004 
     -- Criteria For Rating German Residential Mortgage-Backed Securities, 
Aug. 31, 2001 
 
RATINGS LIST

Ratings Affirmed; CreditWatch/Outlook
                               To                From

Westdeutsche ImmobilienBank
  Mortgage-Covered Bond Program
    Issue Ratings              AA/Stable/A-1+    AA/Watch Neg/A-1+

 (Caryn Trokie, New York Ratings Unit)
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