International rating agency Moody's has assigned a Baa2 provisional long-term rating to the mortgage covered bonds (CB) to be issued by Alpha Bank Romania, the second-weakest grade of the “investment grade” category. For comparison, Romania’s grade is one notch weaker (Baa3 on Moody's scale).

The rating of the covered bonds reflects two things: the credit strength of Alpha Bank Romania and the value of the cover pool (mortgage loans re-financed by Alpha Bank).

Alpha Bank Romania will launch a EUR 200 million tranche of its EUR 1 billion mortgage covered bonds program, to refinance mortgage loans issued on the residential segment. Roughly half of the pool of loans is denominated in local currency, with the other half denominated in foreign currency (euro).

In the pre-sale report, Moody’s outlines credit strengths as including the full recourse of the covered bonds to the issuer (Alpha Bank Romania) and support provided by the Romanian legal framework for covered bonds. Credit challenges include the high level of market risk and the high level of dependency on the issuer. 

editor@romania-insider.com

(Photo source: Facebook / Alpha Bank)