Bank of Scotland's 2.5 bln eur mortgage covered bonds rated final 'AAA'

Bank of Scotland's 2.5 bln eur mortgage covered bonds rated final 'AAA' - Fitch

	Published : Mon, 29 Oct 2007 07:38 By : Agencies Print this Story

MUMBAI (Thomson Financial) - Fitch Ratings said it has assigned a final rating of 'AAA' to Bank of Scotland PLC's (BOS) 2 bln eur Series 25 mortgage covered bonds due January 2015.

The ratings agency said the ratings of all other 24 outstanding issues under BOS's mortgage covered bonds programme are also affirmed at 'AAA' and the latest issue brings the total outstanding mortgage covered bonds to an equivalent of 22.4 bln stg.

The different banking licenses from HBOS Treasury Services PLC (HBOSTS) and Halifax PLC along with their assets and liabilities were merged into BOS on Sept 17, and the former two entities ceased to exist, making BOS the issuer of this covered bonds programme.

Fitch said the discontinuity factor (D-factor) assigned to BOS's mortgage cover pool is unaffected by this change in the legal structure and remains at 9.9 pct which reflects its positive view on the asset segregation mechanism provided by the contractual arrangements, the presence of a pre-maturity test, and the historical size of the RMBS and wholesale loan markets in the UK, even though there can be no guarantee that loans could be realised as predicted.

Provisions relating to the appointment of a master servicer upon a downgrade of the issuer below 'BBB-' provide comfort that the pool should continue to be managed without interruptions, the ratings agency said.

Fitch said its assessment also takes into account that contractual covered bondholders do not currently benefit from any specific involvement of the UK regulator.

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Bank of Scotland's 2.5 bln eur mortgage covered bonds rated final 'AAA' - Fitch