The AAA ratings on Bankia S.A.’s cédulas hipotecarias (Spanish mortgage-covered bonds) reflect the issuer rating of BBB+/ Stable / A-2, further enhanced by a seven-notch uplift.

The primary rating driver is cover pool support, reflecting generous available overcollateralisation. This is provided by the full mortgage book which serves as collateral for the bonds. The asset quality of the collateral is improving but is still considered weak in an international context. Market risks, in particular mismatch risks, remain significant, but are also offset by available overcollateralisation.

The fundamental uplift adds six notches, effectively providing a rating floor at AA+. Accordingly, only one out of a maximum of three notches for the cover pool uplift was granted enabling the programme to reach the highest ratings achievable. This provides a two-notch rating buffer to an issuer downgrade.

On 12 July 2018, Scope affirmed the ratings of Bankia’s Spanish mortgage-covered bonds at AAA/Stable.

To access the rating report, click here