(The following statement was released by the rating agency)
FRANKFURT/LONDON, April 17 (Fitch) Fitch Ratings is maintaining
BANK AG's (COREALCREDIT; BBB/F2/Stable) mortgage covered bonds'
'AA-' rating on Rating Watch Evolving (RWE).
The rating action follows the completion of the acquisition of
Aareal Bank AG ( A-/Negative/F1) and the subsequent upgrades of
Long- and Short-term Issuer Default Ratings (IDR) to 'BBB' and
(see "Fitch Upgrades COREALCREDIT's IDR to 'BBB' on Acquisition
By Aareal Bank"
dated 9 April 2014 on www.fitchratings.com).
KEY RATING DRIVERS
Following the upgrade of COREALCREDIT`s IDR, the mortgage
covered bonds would be
eligible for an upgrade, provided the bank is committed to a
overcollateralisation (OC) in line with the higher rating.
However, the RWE is
being maintained as a result of uncertainty of the relevance of
mortgage Pfandbrief programme to Aareal Bank Group's funding.
In the absence of both new Pfandbrief issuance and the addition
of new cover
assets, the programme may be considered as dormant. For dormant
Fitch would rely on a publicly committed OC or, in its absence,
on the legal
minimum OC. With the currently committed OC of 13%, which is
equal to Fitch's
breakeven OC for the existing rating, the 'AA-' rating would
most likely be
affirmed. An increased OC would make the programme eligible for
an upgrade and a
fall in the OC to the legally required minimum would trigger a
The RWE will be resolved once Fitch has received further
COREALCREDIT's future loan origination and Pfandbrief issuance
as well as
intentions regarding OC maintenance.
The 'AA-' of COREALCREDIT's mortgage covered bonds would be
downgrade if any of the following occurs: (i) the IDR is
downgraded by four or
more notches to 'BB-' or lower; or (ii) the OC that Fitch
considers in its
analysis drops below Fitch's 'AA-' breakeven level of 13%.
The Fitch breakeven OC for the covered bond rating will be
others, by the profile of the cover assets relative to
bonds, which can change over time, even in the absence of new
Therefore the breakeven OC to maintain the covered bond rating
cannot be assumed
to remain stable over time.
+49 69 768 076 126
Fitch Deutschland GmbH
D-60325 Frankfurt am Main
+49 69 768 076 133
+49 69 768 076 261
Media Relations: Christian Giesen, Frankfurt am Main, Tel: +49
69 768076 232,
Applicable criteria, 'Covered Bonds Rating Criteria', 10 March
for the Analysis of Commercial Real Estate Loans Securing
Covered Bonds', 14
October 2013 and 'Covered Bonds Rating Criteria - Mortgage
Refinance Stress Addendum', dated 04 February 2014 are available
Applicable Criteria and Related Research:
Covered Bonds Rating Criteria
Covered Bonds Rating Criteria - Mortgage Liquidity and Refinance
Criteria for the Analysis of Commercial Real Estate Loans
Securing Covered Bonds
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
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
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH