UK covered bonds of seven issuers were placed on review for possible downgrade by Moody’s yesterday (Wednesday), after the rating agency put 14 UK financial institutions on review for downgrade on Tuesday.

Triple-A rated covered bonds from Coventry Building Society, Nationwide Building Society, Newcastle Building Society, Principality Building Society, Skipton Building Society, and two programmes from the Co-operative Bank (The Co-operative Covered Bond Programme and Britannia Covered Bond Programme) were all affected. Yorkshire Building Society’s Aa1 rated programme was also placed on review for possible downgrade.

On Tuesday Moody’s placed 14 UK financial institutions on review for possible downgrade while announcing rating reviews, outlook changes, and rating affirmations for 18 UK financial institutions.

The rating agency expects to take three months to review the levels of systemic support with regard to the senior debt ratings of UK banks and building societies in a post-crisis environment.

Moody’s said it would focus on a number of factors during the process, including “the extent of support that should be incorporated into each institution’s ratings taking into account how difficult it would be for regulators to deal with a failure of the institution”.

Short and long term debt and/or deposit ratings would also be taken into account, as well as any upward pressure on standalone ratings, which could “mitigate some of the downward pressure on the senior debt ratings during the review period”.

The rating agency said that it would incorporate any new issuer ratings into its covered bond analysis and take into account any actions issuers might take such as adding overcollateralisation, if necessary, or amending structures.