S&P ups Arion, Landsbankinn bonds

S&P said it raised the mortgage covered bonds of Arion Bank hf and Landsbankinn hf to A from A-.

The upgrade follows the agency’s assessment of the Icelandic resolution regime as sufficiently effective after Iceland adopted legislation and polices improving protections, the agency said.

“Our covered bonds criteria recognize that an effective resolution regime allows an issuer to service its covered bonds following a bail-in of its senior unsecured obligations. This means that a bank facing failure may continue to make payments on its covered bonds once resolved without accessing the cover pool. In jurisdictions where the systemic importance of covered bonds to the financial markets is greater, we expect that financial authorities will have a stronger incentive to resolve a failing bank and restore it as a going concern rather than liquidate it,” S&P said in a press release.

Both banks’ issuer ratings are BBB and have stable outlooks.

Moody’s assigns A3(hyb) AXA notes

Moody's Investors Service said it assigned an A3(hyb) rating to the €1.25 billion of dated subordinated notes due 2043 to be issued by AXA under its €18 billion medium-term note program, and placed the notes on review for upgrade.

“The A3(hyb) rating of the debt reflects (i) the ranking of the debt (subordinated), (ii) the mandatory coupon deferral mechanism (in case of breach of regulatory capital requirements) and the optional deferral mechanism, as well as (iii) the cumulative nature of deferred coupons, in case of deferral. The A3(hyb) rating is in line with Moody's standard notching practices for this type of instruments issued by holding companies,” the agency said in a press release.

The notes are intended to qualify as tier 2 capital under Solvency II.

The proceeds will be used for general corporate purposes, including the refinancing of part of the group's debt.

AXA’s A2 senior unsecured debt rating is being reviewed for upgrade by the agency.

Fitch rates AXA notes A-

Fitch Ratings said it rated AXA SA's €1.25 billion of subordinated tier 2 notes due March 10, 2043 A-. The first-call date for the notes is Sept. 10, 2032.

“The notes are rated two notches below AXA SA's long-term issuer default rating of A+, which has a positive outlook, to reflect their subordination status (one notch) and non-performance risk (one notch),” Fitch said in a press release.

The proceeds will be used for general corporate purposes including the refinancing of part of the group's debt.

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