TEXT-Fitch updates commercial real estate criteria for covered bonds

Thu Feb 7, 2013 8:27am EST

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(The following statement was released by the rating agency)

Feb 07 - Fitch Ratings has updated its criteria for analysing asset related risks of commercial real estate loans that are used as collateral for covered bonds. The report replaces the previous report "Criteria for the Analysis of Commercial Real Estate Loans Securing Covered Bonds" dated 10 August 2012.

Fitch updates the criteria for the purpose of minor editorial changes and clarifications such as additions to the criteria limitations section which explain the instances where rating caps apply. The update will not have any rating impact.

Cover pool features that are generally inconsistent with high rating categories may be subject to rating caps. If certain risks factors relating to specific borrowers or loans are identified and not mitigated (e.g. through asset diversification or amortization), Fitch may not give credit to any proceeds from the respective assets in high rating scenarios.

In addition, Fitch has changed the borrower concentration limit to 0.5% of the total cover pool above which the agency expects to receive additional information such as detailed rental information. This limit is now in line with Fitch's application of additional stresses to non-SPC borrowers to address obligor concentration risk.

The full list of data fields Fitch expects to receive for all cover pool assets is included in the updated criteria report.

Link to Fitch Ratings' Report: Criteria for the Analysis of Commercial Real Estate Loans Securing Covered Bonds