...Two-Notch Downgrade Buffer: The `AAA' covered bond rating is based on Kookmin Bank's Long-Term Issuer Default Rating (IDR) of `A', an IDR uplift of zero notches, a payment continuity uplift (PCU) of six notches, a recovery uplift of one notch and the 55.6% asset percentage (AP) relied upon by Fitch Ratings in its analysis, which gives greater protection compared to its `AAA' breakeven AP of 82.5%. The Stable Outlook reflects a two-notch buffer against a downgrade of the bank's IDR. Strong Liquidity Protection: Fitch's PCU of six notches reflects the programme's liquidity protection in the form of a soft bullet issuance with a 12-month principal extension period, as well as interest protection provisions in the form of a reserve that covers covered-bond swap payments and senior expenses on a rolling three-month basis. Recovery Uplift Capped: The recovery uplift is capped at one notch as foreign-exchange risk could have a material impact on recoveries given default of the covered bonds. The...
