Mortgage covered bonds are unaffected, says agency
ASB Bank has had its long-term issuer default rating (IDR) outlook revised to negative from stable by credit rating agency Fitch Ratings. Its IDR was also affirmed as “AA-.”
The move follows the similar action the ratings agency took on ASB’s parent company Commonwealth Bank of Australia (CBA).
However, Fitch Ratings said ASB’s mortgage covered bonds that are rated “AAA” with a stable outlook, and are unaffected by the revision of ratings.
“This is because the 'AAA' rating assigned to the covered bonds can withstand a four-notch downgrade of the respective bank's IDR before the rating is subject to a downgrade, all else being equal,” it stated.
Fitch Ratings also said the outlook on ASB and its IDRs are aligned with those of CBA to reflect the agency’s view that there continues to be an extremely high likelihood of support from CBA, if required, as the New Zealand subsidiary is a highly integrated and integral part of CBA's business.
