Moody’s upgraded by two notches the forint-denominated covered bonds issued by OTP Mortgage Bank (A1, Prime-1) to Aa2 from A1, the agency announced on Tuesday. Moody’s explained that the rating addresses the expected loss posed to investors by the legal final maturity and noted that its ratings address only the credit risks associated with the transaction.

The ratings of foreign currency denominated covered bonds remain at A1, being constrained by the foreign currency ceiling for Hungary. The covered bonds are securities issued directly by OJB, a wholly owned subsidiary of OTP Bank (A1, Prime-1), and benefit from the security provided by a pool of Hungarian residential mortgages and the strength of the Hungarian covered bond legislation, according to the press release.