Bankia’s AAA covered bond ratings reflect a seven-notch rating uplift from the BBB+ issuer rating. The primary rating driver is cover pool support resulting from a generous overcollateralisation of 180.5% as of 31 March 2020, which mitigates liquidity mismatch risks from slow scheduled amortisation of cover assets compared to a relatively fast redemption profile for the covered bonds.

Fundamental credit factors provide a credit support of up to six notches shielding the ratings against a deterioration of the cover pools credit quality.

Provided that the covered bond programme’s risk structure does not change materially, the current covered bond ratings supported by the cover pool could remain unchanged up to a two-notch downgrade of the issuer – also supporting the Stable Outlook on the covered bonds

This is not a rating action. On 10 July 2020, Scope affirmed the covered bonds at AAA/Stable. Click here for the corresponding press release.

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