DBRS upgraded the rating of Banco Comercial Português (BCP) covered bonds from BBB (high) to A (low) yesterday (Monday) as a result of a pledge by the Portuguese issuer to increase committed overcollateralisation after the programme was downgraded in January.

DBRS said that the cover pool of BCP’s covered bond programme has a credit assessment of BBB (low), but that the issuer’s pledge to raise committed overcollateralisation from 26.5% to 32% caused the rating agency to upgrade the rating to A (low).

DBRS had previously downgraded the programme from A (low) to BBB (high) on 21 January following the implementation of its updated European covered bond methodology.

Also contributing to yesterday’s rating uplift were the confirmation on 5 December of the issuer rating of BBB (low) with negative trend, BCP’s capabilities of generating cover pool assets and servicing the cover pool, and the assessment of “Adequate” of the legal and structuring framework, said DBRS.

Covered bond analysts compared DBRS’s rating action with a downgrade of the BCP programme to Ba1 by Moody’s in December (see here for previous coverage), and said that DBRS’s A (low) rating, in combination with Fitch’s BBB-, allows the programme to retain its ECB repo eligibility.