Avondale Securities removed from CreditWatch by S&P


Ratings agency Standard & Poor’s have removed the ratings of two tranches of life insurance-linked notes issued by Avondale Securities SA. from CreditWatch as a correction to an administrative error. The notes issued by Avondale Securities were designed to transfer a block of life insurance risk to the capital markets through securitisation to allow the Bank of Ireland to capitalise the expected value in force of a block of life insurance policies.

The two tranches had been downgraded and placed on CreditWatch by S&P back in February because of the close link to the Bank of Ireland’s rating. The Bank of Ireland had been downgraded due to the economic situation in Ireland which had worsened earlier this year. Then in July S&P removed the Bank of Ireland’s ratings from CreditWatch, but didn’t revisit the Avondale Securities ratings at the same time.

S&P said; “The ratings on the class A-1 and A-2 notes are weak-linked to the rating on BOI due to the support agreement obligating BOI to meet, under certain conditions, payments due on the notes, and potential tax liabilities, as well as BOI’s servicing of the policies.”

So the announcement yesterday was to rectify the CreditWatch status on the notes while leaving both tranches rated at ‘BB+’ and reflects an increased confidence in the Bank of Ireland’s ability to honour any due payments.

Read our previous coverage on Avondale Securities.

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