Fitch will in March publish a consultation paper on proposed revisions to its covered bond counterparty criteria, but today (Tuesday) said that it does not anticipate changes to its covered bond ratings if the proposals are adopted.

The rating agency said that the covered bond consultation paper will complement publication, in the form of an exposure draft, of proposed amendments to its structured finance counterparty criteria, also in March.

The covered bond counterparty exposure draft is due to contain Fitch’s proposals on an updated treatment of the netting of collateral amounts for individual swap contracts under the same master agreement, and the treatment of termination payments ranking pari passu with covered bondholders.

The rating agency will be seeking feedback on such proposals, and expects to publish revised criteria by May.

It said that the structured finance and the covered bond counterparty criteria reports should be read together since the proposed amendments to the structured finance criteria, if adopted, in most cases will also apply to the covered bond counterparty criteria.

The latter contain guidelines on instances where Fitch’s analysis differs from the structured finance criteria, mostly due to the dual nature recourse of the instrument.

The rating agency said that it has, for example, reflected the recourse to both the issuer and the counterparty in its criteria with less strict treatment applied to external counterparties, and that it does not expect to make changes to this treatment.