Kookmin Bank covered bonds affirmed at AAA with stable outlook

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Kookmin Bank covered bonds AAA

Highlights

Fitch Ratings affirmed Kookmin Bank's EUR2.1 billion (KRW3.1 trillion) mortgage covered bonds at 'AAA' with a stable outlook after a periodic review.
Kookmin's covered bonds are rated five notches above its long-term issuer default rating due to overcollateralisation, payment continuity uplift, and recovery uplift.
Fitch's 'AAA' breakeven asset percentage remains at 92.5% (overcollateralisation of 8.1%) with a cover pool of 30,223 loans totaling KRW4.7 trillion as of end-June 2026.

Programme review and rating drivers

As reported by Fitch Ratings, the affirmation covers Kookmin Bank's EUR2.1 billion mortgage covered bonds, equivalent to about KRW3.1 trillion, with the outlook maintained at stable following a periodic review of the programme.

The 'AAA' rating is based on Kookmin's long-term issuer default rating and stable outlook, together with uplifts applied to the programme and the overcollateralisation protection provided through the asset percentage structure. The covered bonds are rated five notches above Kookmin's long-term issuer default rating, against a maximum achievable uplift of seven notches.

Fitch says the uplift structure includes zero notches of resolution uplift, six notches of payment continuity uplift and one notch of recovery uplift. The payment continuity uplift remains supported by a 12-month extension period on the soft-bullet bond, while the recovery uplift stays capped at one notch because the programme is significantly exposed to foreign-exchange risks.

Collateral profile and downgrade triggers

Fitch says its 'AAA' breakeven asset percentage remains unchanged at 92.5% after rounding, equivalent to overcollateralisation of 8.1%, following the application of revised covered bond rating criteria.

As of end-June 2026, the cover pool consists of 30,223 loans secured by first-ranking mortgages on Korean owner-occupied residential properties, with a total outstanding balance of about KRW4.7 trillion. Fitch says the key rating drivers listed in the applicable sector criteria are not material to this rating action.

The agency says a downgrade could follow if Kookmin's issuer default rating falls by three or more notches to 'BBB' or below, or if Korea's country ceiling is revised downward to 'AA' or below.

Our earlier coverage of Shinhan Bank’s mortgage covered bonds described how the programme kept its ‘AAA’ rating after Fitch’s periodic review, supported by the bank’s issuer rating, programme protections and overcollateralisation. We also noted the key uplift components behind the rating and that the stable outlook provided a buffer against a potential downgrade, while foreign-exchange risk remained a limiting factor for recovery uplift.

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