Moody’s yesterday (Tuesday) placed on review for downgrade five Spanish covered bond programmes, three of which will be cut if the respective issuer rating is lowered, and placed on review for upgrade covered bonds issued by Banco CAM.

Bankinter

The rating agency is reviewing for downgrade public sector covered bonds issued by CaixaBank (rated Aaa) and Bankia (A1), and mortgage backed covered bonds issued by Bankia (Aa2), Bankinter (Aaa), and Ibercaja Banco (Aa1). Yesterday’s rating actions comes after Moody’s on Monday placed on review for downgrade the issuers’ unsecured ratings.

The Timely Payment Indicators (TPIs) assigned to the mortgage and public sector programmes are “probable” and “improbable”, respectively. Under Moody’s TPI framework this provides for a TPI leeway of one notch for CaixaBank’s public sector covered bonds and Bankinter’s mortgage covered bonds, while covered bonds issued by Bankia and Ibercaja would be downgraded if the issuer rating is cut, all else being equal.

The rating agency is reviewing for upgrade cédulas hipotecarias (Baa1) and cédulas terriotoriales (Baa2) issued by Banco CAM because the latter is being acquired by Banco Sabadell, a move that was announced last Wednesday (7 December).

Mortgage covered bonds issued by Banco Sabadell are on review for downgrade.

“This follows the review for downgrade of Banco Sabadell’s issuer ratings due to, amongst others, Moody’s reassessment of the financial strength of all Spanish banks and the effect of the integration with Banco CAM on the bank’s credit profile,” said the rating agency.