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Recently de-merged Kommunalkredit Austria (KA) has mandated leads to roadshow the first social covered bond ever to be issued from a public sector programme, and the first green bond from Austria. Rated Baa2, it is also set to be one of the weakest credits in the covered bond universe.
The Austrian lender has mandated Commerzbank, Deutsche Bank, ING and Raiffeisen Bank International for a roadshow and plans to issue a public sector backed covered bond rated Baa2 by Moody's and A by DBRS.
The bond will have an intermediate maturity and will be secured on assets with a social cause. The borrower said it plans to launch the deal in the near future but it has not yet officially announced a date for the roadshow.
New issuer, old name
Kommunalkredit is an old name in covered bonds, but KA is a new issuer. Following the demerger of the old Kommunalkredit in 2015, the bank was moved into state-owned entity KA Finanz, and the remainder, the new entity KA, was hived off and sold to Gesona Beteiligungsverwaltung, an acquisition vehicle owned by Interritus and Attestor. The new KA is no longer rated by Moody's but has a BBB (low) rating from DBRS.
On October 2016, DBRS changed its outlook on the new KA from stable to negative citing a lack of progress towards meeting profitability targets and new business volumes following regulatory delays in the approval of its demerger.
"The bank has a challenging timeframe to meet to build up its new project finance activities in a conservative manner at the same time that the legacy portfolio runs off," said DBRS.
Moody's said in its presale report that the programme benefits from high quality cover assets, but warned that the programme has a "significant...