Moody’s yesterday (Wednesday) cut mortgage and public sector covered bonds issued by Bankia and NCG Banco, and placed Catalunya Banc covered bonds on review for downgrade, after corresponding rating actions on the issuers.

The rating agency cut Bankia’s cédulas hipotecarias from Aa2 to A1 and NCG Banco’s from A1 to Baa1. Bankia’s public sector backed covered bonds were lowered from A1 to A2, and NCG Banco’s from A2 to Baa2.

Moody’s rates Bankia Baa3 and NCG Banco Ba1, with both ratings on review for downgrade after being cut yesterday.

Based on a Timely Payment Indicator (TPI) of “probable”, the mortgage covered bonds of Bankia would be downgraded once the issuer is cut to below Baa3, all else being equal. For Bankia’s public sector programme, the TPI leeway is also zero, this time based on a TPI of “improbable”.

Covered bonds issued by NCG Banco are at the capped ratings based on the issuer rating and TPIs of “probable” and “improbable” assigned to the mortgage and public sector programmes, respectively. Moody’s described the TPI leeway as “limited”.

Moody’s is reviewing for downgrade Baa1 rated mortgage and Baa2 rated public sector covered bonds issued by Catalunya Banc (CatalunyaCaixa). The rating agency yesterday placed the issuer’s rating (Ba1) on review for downgrade.

Based on a TPI of “probable” and the Ba1 issuer rating, the mortgage covered bonds’ rating is capped at Baa1. The public sector covered bonds have been assigned a TPI of “improbable”. Combined with the Ba1 issuer rating, this caps the cédulas territoriales at Baa2.