Moody’s placed Aaa rated public sector covered bonds issued by Austria’s Hypo Tirol Bank on review for downgrade on Friday after putting the issuer’s rating under review.

The Timley Payment Indicator (TPI) of the covered bonds is “high”, meaning that if Hypo Tirol’s rating falls below Baa1 the ratings assigned to the covered bonds may be capped at a level lower than the current rating.

Hypo Tirol Bank is rated A2, but Moody’s has warned that if the issuer is downgraded to below A3 the credit that is being given to the collateral held in the cover pool may be limited if the collateral is not considered “committed”. Moody’s considers overcollateralisation to be “committed” if the issuer’s discretion to remove the collateral is sufficiently restricted.