Moody's Investors Service has raised the rating of Mortgage Covered Bonds issued by mBank Hipoteczny from Aa3 to Aa2. The rating of the covered bonds was constrained at the Aa3 level by the „Local and Foreign Currency Country Ceilings for Bonds and Other Obligations Methodology”.
The rating upgrade results from updated methodology for local and foreign currency country ceilings titled "Country Ceilings Methodology" specifying the maximum rating level for instruments issued in the country, published by Moody's Investor Services in December 2020.
The new methodology allowed to obtain higher ratings for Polish covered bonds, which credit quality is rated higher than it resulted from the previous Country Ceiling methodology. Changes in methodology include, first of all, a revision of the country ceiling as a benchmark for issuance in the local currency – through diversification the local currency country ceiling into factors that assess the level of non-diversifiable risk and factors enabling the strongest locally domiciled issuers to exceed the rating of the sovereign. For the foreign currency country ceiling, Moody's uses the local currency country ceiling as a starting point including capital flow factors (transfer and convertibility risk) in the local currency country ceiling.
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