FITCH: GREEK COVERED BONDS REBOUND SINCE END-2016
Fitch Ratings-Milan/London-16 July 2018: The issuance of Greek covered bonds has gained substantial momentum on the back of improved market confidence and the proven strength of the country’s covered bonds legal framework, Fitch Ratings says.
Total outstanding balance of Fitch-rated Greek mortgage covered bonds has increased to EUR8 billion from EUR2.2 billion since end-2016, with public and privately placed series representing about 27% of new issuance. At the same time, the aggregate cover pools’ size has increased to EUR11 billion in May 2018 from around EUR3.5 billion in December 2016.
Covered bonds’ exclusion from capital controls, present in Greece since 2015, has played a key role in ensuring the timely payment of interest and principal to all existing covered bonds so far. Additionally, the Greek covered bonds’ legal framework includes the exemption from bail-in of fully collateralised covered bonds in an issuer resolution scenario.
Greek covered bonds are rated at the ‘BB-‘ sovereign Country Ceiling, supported by two notches of Issuer Default Rating (IDR) uplift and Fitch’s expectation of recoveries in the event of default. The programmes’ ‘BB-‘ breakeven OC mirrors the cover pools’ stressed credit losses at the covered bonds rating and reflects the characteristics of the residential mortgage loans included in the portfolios.
A complete set of credit metrics and statistics for the Greek covered bonds is illustrated in the Greek Covered Bonds Peer Review, available at www.fitchratings.com or by clicking the link below.
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