Fitch downgraded mortgage covered bonds issued by four Greek banks yesterday (Thursday), but left programmes of all four banks at investment grade levels while they are being restructured, meaning that they continue to meet the European Central Bank’s repo eligibility criteria.

Alpha Bank, Eurobank EFG, National Bank of Greece (NBG) and Piraeus had programmes cut from BBB but only to BBB-. Fitch’s action was critical given that the programmes need at one investment grade rating to be ECB eligible and that Moody’s had cut all of them to sub-investment grade at the beginning of June.

A second NBG programme was cut from BB+ to BB- by Fitch, but NBG retains access through its other programme. Mortgage covered bonds issued by Marfin Popular Bank in Cyprus were unaffected and are BBB, on Rating Watch Negative (RWN).

Fitch said that the rating actions follow the downgrade of the Greek sovereign’s rating from B+ to CCC on Wednesday and downgrades of the ratings of Alpha, Eurobank EFG, NBG and Piraeus to B-, on RWN.

All four programmes that were cut to BBB- are being restructured so that they become partial pass-throughs rather than soft bullets. These changes are expected by 29 July and Fitch said that it will cut the programmes to sub-investment grade if the restructurings are not implemented by then.