Fitch Ratings has affirmed the 'AAA' rating for DBS Bank Ltd's SGD 14.7 billion outstanding mortgage covered bonds, with a stable outlook. This decision follows a periodic review of the bank's covered bond programme, underscoring the strong credit quality and stability of the bonds. The 'AAA' rating is based on DBS's 'AA-' Long-Term Issuer Default Rating (IDR), along with uplifts to the programme and overcollateralisation protection from the asset percentage (AP) of the covered bond programme. The bonds are rated three notches above DBS's IDR, representing the highest possible rating on Fitch's scale, and benefiting from a maximum achievable uplift of seven notches. This uplift consists of a zero-notch resolution uplift, a six-notch payment continuity uplift (PCU), and a one-notch recovery uplift. Fitch also revised its breakeven asset percentage for the covered bonds to 89 per cent, down from the previous 90 per cent. It is expected that the programme's asset percentage will be updated to 89 per cent in the next reporting period, in accordance with the transaction documents. The stable outlook on the bonds reflects a four-notch buffer against any potential downgrade of DBS's IDR, providing significant protection and reinforcing the strength of the covered bond programme. Attribution: Fitch Ratings report
