Moody’s upgrades BoC covered bonds

MOODY’S Investors Service has upgraded to B1 from B3 (on review for upgrade) the ratings on the mortgage covered bonds of Bank of Cyprus (BoC).

It has also affirmed the Caa3 deposit, (P) Caa3 provisional senior unsecured debt ratings and caa3 standalone baseline credit assessment (BCA) of the Bank. The Not-Prime commercial paper and short-term deposit ratings have also been affirmed.

According to the announcement, the affirmation of the ratings reflects the progress the bank has made with its restructuring plan through the early disposal of foreign assets, the reduction of emergency liquidity assistance and the stabilisation of its deposit base despite the abolition of deposit controls in Cyprus.

As part of its deleveraging strategy, the bank has sold its operations in Ukraine, assets in Romania as well as loans in Serbia and the UK. These assets sales had a minor positive effect on the bank’s capital position and allow the bank to refocus on its key domestic market. The asset sales, the early repayment of a sovereign bond and a successful capital increase have also allowed the bank to reduce its emergency liquidity assistance to €6.5bn as of April 2015 from a peak of €11.4bn in April 2013.

In September 2014, the bank successfully complete a €1bn private capital increase which increased its Tier 1 ratio to 13.4 per cent (fully loaded) and allowed it to pass the European Central Bank’s comprehensive assessment in October 2014.

However, the rating affirmations also reflect the significant challenges the bank still faces in terms of improving the quality of its assets and reducing its reliance on central bank funding.

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.