S&P Global Ratings (S&P) has assigned a long-term credit rating of A with a stable outlook to Íslandsbanki’s covered bond program and related Icelandic krona (ISK) denominated covered bond issuances.

The legal and regulatory framework for Icelandic covered bonds stipulates that assets in the cover pool are isolated from the issuer’s risk of insolvency. The asset isolation allows S&P to rate the covered bond program at a higher rating level than the long-term issuer credit rating on Íslandsbanki, which is currently BBB. The rating also considers the strong legal framework that covered bonds issued in Iceland benefit from and the issuer’s mortgage operations, which are viewed by S&P as prudent.