(The following statement was released by the rating agency)
FRANKFURT/LONDON, August 08 (Fitch) Fitch Ratings has upgraded
AG's (COREALCREDIT; BBB/F2/Stable) mortgage Pfandbriefe to 'AA'
from 'AA-' and
removed the rating from Watch Positive. The Outlook is Stable.
KEY RATING DRIVERS
The upgrade follows COREALCREDIT's announcement to withdraw its
overcollateralisation (OC) commitment, effective 8 August 2014
Places COREALCREDIT's Mortgage Pfandbriefe on Rating Watch
Positive" dated 10
July 2014 on www.fitchratings.com).
Following the withdrawal, Fitch bases its analysis on the lowest
within the past 12 months, currently 14.9%, which is above
public OC commitment of 13.0%.
The 'AA' Pfandbrief rating is based on COREALCREDIT's Long-term
Rating (IDR) of 'BBB', an IDR uplift of '2', a Discontinuity Cap
(D-Cap) of '4'
(moderate risk) and the 14.9% OC that Fitch takes into account
in its analysis
which provides more protection than the 14.0% breakeven OC. The
for the covered bonds rating is primarily driven by the Stable
The Pfandbrief rating would be vulnerable to downgrade if any of
occurs: (i) the IDR is downgraded by three or more notches to
'BB' or below; or
(ii) the sum of notches represented by the IDR uplift and the
(D-Cap) is reduced by three or more notches; or (iii) or the OC
considers in its analysis drops below Fitch's 'AA' breakeven
level of 14.0%.
If OC falls to 0% on a nominal, or 2% on a net present value
basis, the minimum
required by German Pfandbrief legislation, it would not be
sufficient to allow
for timely payment of the Pfandbriefe after an issuer default.
As a result the
Pfandbrief rating would likely be downgraded to 'A' because this
level of OC
would limit the covered bond rating to one-notch rating uplift
recovery prospects above COREALCREDIT's IDR as adjusted by the
The Fitch breakeven OC for the covered bond rating will be
affected by, among
others, the profile of the cover assets relative to outstanding
which can change over time, even in the absence of new issuance.
breakeven OC to maintain the covered bond rating cannot be
assumed to remain
stable over time.
More details on the portfolio and Fitch's analysis are available
+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,
Additional information is available on www.fitchratings.com.
Applicable criteria, 'Covered Bonds Rating Criteria' dated 10
'Criteria for the Analysis of Commercial Real Estate Loans
Bonds' dated 22 May 2014 and 'Covered Bonds Rating Criteria -
and Refinance Stress Addendum', dated 04 February 2014 are
Applicable Criteria and Related Research:
Covered Bonds Rating Criteria
Covered Bonds Rating Criteria â€“ Mortgage Liquidity and
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