Moody’s yesterday (Monday) put on review for downgrade commercial mortgage backed covered bonds issued by Norway’s SpareBank 1 Næringskreditt, but affirmed those of SpareBank 1 Boligkreditt and Møre Boligkreditt.

Moody’s rates SpareBank 1 Næringskreditt’s covered bonds Aa3. It is reviewing the rating for downgrade because it may cut the ratings of the four rated banks in the SpareBank 1 Alliance, which are SpareBank 1 SMN, SpareBank 1 SR-Bank, SpareBank 1 Nord-Norge and Sparebanken Hedmark. The rating agency placed these on review for downgrade last Thursday, and considers that a downgrade of any of the savings banks would negatively affect the credit strength of SpareBank 1 Næringskreditt, to which Moody’s has assigned a private monitored rating.

If it lowers the rating of any of the four rated SpareBank 1 alliance members then this would probably be by one notch, according to Moody’s.

The Timely Payment Indicator (TPI) assigned to SpareBank 1 Næringskreditt’s covered bonds, which are backed by commercial property financings, is “probable”, which Moody’s said would constrain the covered bond ratings to A1 in case the issuer rating is cut.

The TPI assigned to residential backed covered bonds issued by SpareBank 1 Boligkreditt and Møre Boligkreditt is “high”, which does not constrain the covered bonds ratings, said Moody’s.

It added that it expects that the issuers will provide overcollateralisation in committed form in due course.