Covered bonds issued by Australia’s four major banks and their New Zealand subsidiaries will not be affected by a negative review of the issuers by Fitch, the rating agency said yesterday (Wednesday).

Fitch on Monday placed on Rating Watch Negative the four major Australian banks: Australia & New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), and Westpac Banking Corporation. The negative review extends to the majors’ New Zealand subsidiaries.

The rating agency said that there is no impact on the banks’ covered bond programmes as a result of this negative review.

All else being equal, the Australian banks’ covered bonds could still be rated AAA if the issuers were rated at least A in the case of ANZ, CBA and Westpac, and A- in the case of NAB, according to Fitch.

The rating of covered bonds issued by these banks’ New Zealand subsidiaries could be maintained at AAA if the issuers are rated at least A in the case of ANZ National Bank Limited, ASB Bank Limited and Westpac New Zealand Limited, and at least A- in the case of Bank of New Zealand (BNZ).

“Fitch expects to resolve the RWN on all banks within a short time frame and expects that any downgrades of the four major Australian banks’ ratings are most likely to be limited to one notch,” it said, adding that the institutions rated AA are most at risk of being downgraded.

CBA, NAB and Westpac are rated AA by Fitch, while ANZ is rated AA-.