Moody’s Investors Service has upgraded the mortgage covered bond issued by Hungarian mortgage bank FHB. The move follows a recent upgrade of FHB’s deposit ratings.
On 11 May, Moody’s Investor Service has upgraded by one notch to Baa1 from Baa2 the covered bond issued by FHB. Plc, which were placed under review for upgrade at the same time.
The upgrade of the covered bonds followed the upgrade of deposit ratings from B3 to B2, which was also placed on review for further upgrade published on 8 May, 2017.
Concurrently, the bank's baseline credit assessment (BCA) was upgraded to caa1 from caa2, its adjusted BCA was upgraded to b3 from caa1 and its long-term Counterparty Risk Assessment (CRA) was upgraded to Ba3(cr) from B1(cr). The bank's long-term ratings and rating inputs are placed on review for further upgrade. FHB's short-term Not Prime deposit ratings and Not Prime(cr) CRA are unaffected.
According to Moody's, “the upgrade of FHB's ratings primarily reflects the closer integration of the bank into Hungary's savings cooperatives sector which has reduced previous corporate governance risks under its former ownership and has also led the rating agency to increase its assumptions for sector support to high from moderate previously.
“The review for upgrade of the bank's ratings is driven by the expectation for further gradual improvements in FHB's standalone financial metrics, which together with affiliate support from the sector will likely result in a further rating upgrade."
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