S&P upgrades RD §15 bonds

Standard & Poor’s upgraded Realkredit Danmark senior secured issuance yesterday (Wednesday) following its lifting of parent bank Danske’s rating from A- to A Tuesday of last week, which came as part of wide-ranging BRRD-inspired bank rating actions.

The rating agency upgraded the Danish bank’s Section 15 bonds — senior secured issuance — issued out Capital Centres S and T from A- to A, and revised the outlook from stable to negative.

“We generally align our issue ratings on Section 15 bonds issued by Realkredit Danmark with the senior unsecured rating of Danske Bank,” said S&P.

It revised the outlook and ratings of various European banking groups on Tuesday of last week (29 April) following a review of its expectations for government support linked to the introduction of bail-in frameworks.

Included in this raft of rating actions was the upgrade of Danske Bank, which S&P said it had undertaken because it considers that there has been an improvement in the asset quality of Danske, mainly in its Irish business.

S&P yesterday said that the rating actions announced last week have had a limited impact on its ratings of covered bonds, with only four programmes that it rates affected.

“Our ratings and outlooks on all other European covered bond programmes that we rate are unaffected by the bank rating actions,” said S&P.

S&P is also planning to modify its covered bond rating criteria to reflect the asset class’s exemption from bail-in under the Bank Recovery & Resolution Directive (BRRD) and has given advance notice of a pending request for comment, a move it announced on the same day as its European bank rating actions.

The covered bond rating changes resulting from S&P’s bank rating actions were outlook revisions from stable to negative on two Deutsche Pfandbriefbank programmes and the covered bond programme of Crédit Foncier et Communal d’Alsace et de Lorraine Société de Crédit Foncier (CFCAL SCF), although the latter has not issued benchmark covered bonds.