Moody’s downgraded Dexia Municipal Agency obligations foncières from Aa1 to Aa2 yesterday (Wednesday), after it cut the rating of sponsor bank Dexia Crédit Local to Baa2 with negative outlook and cited concern about the timing of a sale of the French issuer.

The rating agency downgraded the sponsor bank yesterday from Baa1.

Under Moody’s methodology, this lower rating combined with a Timely Payment Indicator (TPI) of “probable-high” limits the rating of Dexia MA’s covered bonds at Aa2.

Moody’s also said that its downgrade reflects its concerns about the timing of a sale of a majority stake in Dexia MA to Caisse des Depôts and La Banque Postale, which was initially announced on 20 October.

RBS analysts suggested that Dexia MA’s covered bonds could be upgraded by Moody’s once Dexia MA is transferred to its new owners, noting that Standard & Poor’s no longer links the issuer’s rating to Dexia Crédit Local.