Moody's assigns Aa1 to Luminor bonds

Moody's Investors Service said it assigned a definitive Aa1 long-term rating to the mortgage covered bonds issued by Luminor Bank AS, which are governed by the Estonian Covered Bond Act. The agency previously assigned the bonds a provisional Aa1 rating.

The bond act requires a buffer of liquid assets, floored at a minimum of 2% of the nominal value of the cover pool, to cover potential liquidity gaps over the next 180 days between payments expected to be received under the cover pool assets and the payments due under the outstanding covered bonds. For mortgage covered bonds, primary cover pool assets are limited to residential mortgage loans and the law sets a loan-to-value ratio threshold of 70%. The wide-ranging powers of the cover pool administrator reduce the risk of an asset fire-sale. the agency said.

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