Fitch Maintains BOC's Cypriot Covered Bonds on Rating Watch Negative

Tue Mar 4, 2014 11:33am EST

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(The following statement was released by the rating agency) MILAN/LONDON, March 04 (Fitch) Fitch Ratings has maintained Bank of Cyprus Public Company Ltd's (BoC; Issuer Default Rating (IDR) of 'Restricted Default') covered bonds' B' rating on Rating Watch Negative (RWN). The covered bonds, secured by Cypriot assets, were originally placed on RWN on 28 March 2013. KEY RATING DRIVERS Fitch is continuing to monitor the impact of the current economic environment on the performance of the residential mortgage portfolio, as well as the evolution of the bank's IDR RATING SENSITIVITIES By way of exception to the agency's covered bond rating criteria, Fitch does not use BoC's IDR as a starting point for its credit risk assessment of the covered bonds. However, once BoC's IDR is no longer 'RD', the covered bonds' rating could potentially be affected by movements in BoC's IDR. The covered bonds' rating remains 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 could be downgraded. Fitch expects to resolve the RWN once it completes its assessment on the performance of the residential mortgage portfolio and there is more visibility on the evolution of BOC's IDR. Contact: Primary Analyst Paolo Sala Analyst +39 02 8790 87 292 Fitch Italia S.p.A. Via Morigi, 6 - Ingresso Via Privata Maria Teresa, 8, 20123, Milan Secondary Analyst Roberto Del Ragno Analyst +39 02 8790 87 206 Committee Chairperson Carmen Munoz Senior Director +34 93 323 8408 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 4 September 2013, '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 RMBS Master Rating Criteria' dated 6 June 2013 and 'Covered Bonds Rating Criteria - Mortgage Liquidity and Refinance Stress Addendum', dated 4 February 2014 are available at www.fitchratings.com. Applicable Criteria and Related Research: Covered Bonds Rating Criteria here Counterparty Criteria for Structured Finance and Covered Bonds here Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum here EMEA RMBS Master Rating Criteria here Covered Bonds Rating Criteria - Mortgage Liquidity and Refinance Stress Addendum 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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