DBRS downgraded covered bonds issued by Santander Totta from A to A (low) yesterday (Monday) following a cut in the issuer’s rating from A (low) to BBB (high), on negative trend, last Thursday.

The downgrade of the Portuguese bank came after DBRS lowered Spanish parent Santander from A (high) to A. Santander Totta has a support assessment of SA1 from DBRS, implying strong and predictable support from the parent and meaning that its rating will generally move in tandem with Santander’s.

The ratings of Santander Totta’s covered bonds (obrigações hipotecárias) remain under review with negative implications because DRBS is reviewing its rating of the Portuguese sovereign’s ratings – a review that was extended last Wednesday. Other Portuguese covered bond programmes rated by DBRS – including those of BCP, BII, BES and Montepio – also remain on review with negative implications, the rating agency said yesterday.

DBRS noted that as of 20 July, the notional balance of Santander Totta’s cover pool was Eu7.9bn, resulting in nominal overcollateralisation of 34%. The rating agency said that the downgrade also came after the issuance of a Eu250m August 2015 covered bond on 20 July with a coupon of three month Euribor plus 250bp.