Standard & Poor’s lowered mortgage covered bonds issued by Ibercaja Banco from AAA to AA+ on Friday following a downgrade of the issuer from BBB+ to BBB.

The rating agency has allocated Ibercaja’s covered bonds to Category 1 under its covered bond rating methodology and determined a “low” asset liability mismatch (ALMM), resulting in a maximum potential ratings uplift of seven notches above the issuer rating. S&P has said the overcollateralisation available to support Ibercaja’s mortgage covered bond bonds can sustain the maximum seven notch uplift above the issuer rating.

Any further rating action on the issuer, all things remaining equal, would automatically lead to a corresponding change on the covered bonds, according to the rating agency.