Fitch assigns Kookmin bonds AAA

Fitch Ratings said it assigned Kookmin Bank’s inaugural series of a proposed €500 million of mortgage covered bonds an expected AAA rating with a stable outlook. The proposed bonds are to be sold under Korea’s covered bond legislation, the Korean Covered Bond Act.

The bonds will be secured by a dynamic pool of Korean residential mortgage loans.

The AAA rating of the proposed bonds is based on Kookmin’s long-term issuer default rating of A. The various uplifts above the IDR granted to the covered bond program and the overcollateralization protection provided through the program’s asset percentage, Fitch said.

“The proposed covered bonds are rated five notches above the bank’s IDR. This is out of a maximum achievable uplift of seven notches, consisting of an IDR uplift of zero notches, a payment continuity uplift of six notches and a recovery uplift of one notch. Fitch’s analysis relies on the nominal AP (23.4%), which provides more protection than Fitch’s AAA breakeven AP of 88.5%,” Fitch said in a press release.

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