In the past few weeks, Nykredit and Moody's have had a constructive dialogue on the rating of Nykredit's bond programmes.
The reasons for the dialogue were Moody's changed view as regards mortgage loans refinanced one or more times during the loan term and Moody's revision of Nykredit Realkredit's long-term issuer rating.
Moody's has today affirmed the Aaa rating of covered bonds (SDOs) issued out of Capital Centre E, which is Nykredit's primary capital centre for new lending (all types of mortgage loans exclusive of commercial loans with relatively high LTV ratios). Capital Centre E will in the future chiefly consist of mortgage loans not subject to refinancing.
In Nykredit's view, the Aaa rating reflects the recognition of the initiatives published in Nykredit's stock exchange announcement on 21 June 2011. Over the coming quarters, these initiatives include the formation of a new capital centre for ARMs, two-tier mortgaging and adjustment of administration margins.
Further, Moody's has downgraded the rating of covered bonds (ROs) issued out of Capital Centre D from Aaa to Aa1. Capital Centre D is in part applied for old commercial loans, including mainly old commercial loans with inherent refinancing (ARMs, money market-linked loans, etc).
In addition, Moody's has affirmed Nykredit's and Totalkredit's other bond ratings.
- We note with satisfaction Moody's positive stance on our initiatives concerning our future mortgage lending structure. Our Aaa rating of the about DKK 600bn in Capital Centre E is thus maintained, says Søren Holm, Group Managing Director.
- We accept the rating downgrade in respect of Capital Centre D (chiefly old commercial loans subject to refinancing) from Aaa to Aa1. Our acceptance should be seen in the light of Moody's very high capital requirements for a Aaa rating of bonds funding loans subject to refinancing, adds Søren Holm, Group Managing Director.
- Overall, we have reached a good solution, which ensures a low risk level in our mortgage lending business and has the least consequences for our investors.
Moody's stricter requirements will increase the cost of capital as expected, says Søren Holm, Group Managing Director.
The rating of Nykredit's future capital centre for covered bonds funding ARMs and money market-linked loans will be discussed with the rating agencies within the next 1-2 months.
Please refer to Nykredit's Investor Relations webpage for further details at nykredit.com/ir.
Contacts:
Søren Holm, Group Managing Director, tel +45 44 55 10 10, or Corporate Communications, tel +45 44 55 14 68.
