Fitch: Commerzbank Pfandbriefe AAA

Fitch Ratings said it assigned Commerzbank AG's outstanding public sector Pfandbriefe and expected first issuance under its new program an expected AAA(EXP) rating with a stable outlook.

The outstanding Pfandbriefe consist of 52 bonds totaling €1.03 billion issued by Deutsche Schiffsbank, a former private bank owned by Commerzbank.

The expected first Pfandbriefe issuance under the new program is expected to be €500 million in size and will have a medium-term maturity. Fitch modeled a five-year issuance with a fixed-interest rate.

Fitch said the expected AAA(EXP) rating on Commerzbank's public sector covered bonds program is based on its long-term issuer default rating of A+, the discontinuity cap (D-Cap) of 5 and overcollateralization (OC) between the cover pool and the covered bonds of at least 18%.

This level of OC supports an AA rating on a probability of default basis and allows for a two-notch recovery uplift for the covered bonds in an AAA scenario, the agency said.

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