Negative SpareBank 1 Næringskreditt review, but others affirmed

Moody’s put on review for downgrade commercial mortgage backed covered bonds issued by Norway’s SpareBank 1 Næringskreditt on Monday, but affirmed those of SpareBank 1 Boligkreditt and Møre Boligkreditt, while S&P changed the outlook from stable to negative on Finnish issuance from Bank of Åland.

Moody’s rates SpareBank 1 Næringskreditt’s covered bonds Aa3. It is reviewing the rating for downgrade because it may cut the ratings of the four rated banks in the SpareBank 1 Alliance, which are SpareBank 1 SMN, SpareBank 1 SR-Bank, SpareBank 1 Nord-Norge and Sparebanken Hedmark.

The rating agency placed these on review for downgrade on Thursday of last week (6 December), and considers that a downgrade of any of the savings banks would negatively affect the credit strength of SpareBank 1 Næringskreditt, to which Moody’s has assigned a private monitored rating.

If it lowers the rating of any of the four rated SpareBank 1 alliance members then this would probably be by one notch, according to Moody’s.

The Timely Payment Indicator (TPI) assigned to SpareBank 1 Næringskreditt’s covered bonds, which are backed by commercial property financings, is “probable”, which Moody’s said would constrain the covered bond ratings to A1 in case the issuer rating is cut.

The TPI assigned to residential backed covered bonds issued by SpareBank 1 Boligkreditt and Møre Boligkreditt is “high”, which does not constrain the covered bonds ratings, said Moody’s.

It added that it expects that the issuers will provide overcollateralisation in committed form in due course.

Standard & Poor’s revised the outlook from stable to negative on Finnish covered bonds issued by Bank of Åland to reflect the status of the outlook on the issuer’s rating.

S&P rates the covered bonds AA, which incorporates the maximum potential uplift of six notches above the issuer rating (BBB). As a result, any downgrade of Bank of Åland would trigger a cut of the covered bonds.