Moody's Investors Service is shifting its rating methodology for Pfandbriefe, introducing a new ratings floor for issuers of this paper. It could spell positive upside potential for securitizations linked to public and mortgage sector Pfandbriefe, said analysts at Dresdner Kleinwort Wasserstein.
Issuing banks with an issuer rating of investment grade will, going forward, receive ratings no lower than Aa2' for public sector Pfandbriefe and Aa3' for mortgage sector Pfandbriefe. The new methodology is awaiting changes by the German regulator (BAFin) to the procedure of calculating the net present value of covered mortgages and public sector Pfandbriefe which is expected in the coming weeks. Moody's will continue to apply the three to four notch rating differential for issuers with better ratings.