DBRS has rated two more Portuguese covered bond programmes, those of BCP and subsidiary Banco de Investimento Imobiliário, while an official at Santander Totta, whose programme was rated by DBRS on Monday, spoke to The Covered Bond Report about the move.

The mortgage covered bond programmes of Banco Comercial Português (BCP) and Banco de Investimento Imobiliário (BII) were assigned ratings of A (low) by DRBS. The rating agency said that the ratings are based on these factors including: the covered bonds being senior unsecured direct deposit obligations of BCP, which is rated BBB (low) with negative trends; Portuguese covered bond laws; a DBRS legal and structuring framework assessment of “adequate”; DBRS’s cover pool credit assessments of BBB (high) for BCP and BB (high) for BII; committed overcollateralisation levels of 24.1%; BCP’s capabilities with respect to origination (in the case of the BCP programme), and servicing of the cover pool; and the credit quality of the collateral and structural features of the programme (extendible maturity and collateral eligibility criteria).

The ratings take DBRS’s ratings of European covered bond programmes to four, all in Portugal, after it rated a Santander Totta programme on Monday and a Caixa Económica Montepio Geral programme in December.

Access to European Central Bank funding via retained covered bonds has been under threat for most Portuguese issuers as their covered bond ratings have been on the cusp of being downgraded to junk. An official at Montepio told The CBR at the time it gained its DBRS A (low) rating that this had been sought to help it maintain access to ECB funding, with its covered bonds at the time being rated Baa3/BBB- by Moody’s and Fitch.

Santander Totta, which was assigned its A (high) rating on Monday, is in a different position as its covered bonds were already rated higher than those of its peers.

“When we started working on the rating with DBRS, we had all our ratings in the same single-A range from the other rating agencies,” Hugo Albuquerque, director with responsibility for funding at Santander Totta, told The CBR, “although our covered bonds have since been recently downgraded by Moody’s to Baa1 as a result of the downgrade of the Republic of Portugal.

“We are keeping the other rating agencies,” he added.

He said that the new rating of Santander Totta’s covered bonds comes alongside other DBRS ratings for the bank.

“We wanted to get also a rating from DBRS as we already have done so in some securitisations,” he said, “and we are working on long term and short term ratings with them. It therefore made sense to have this rating from them, too.”

Albuquerque said that he was well impressed with DBRS’s work, despite the rating agency being a newcomer to the covered bond market.

“With investors, they will probably need some more time to be considered,” he added.

The Covered Bond Report understands that DBRS is working on further programmes that will broaden its coverage in Europe.