Barclays has removed references to Fitch from the documentation of its public sector covered bond programme. The rating agency last month put the covered bonds’ AAA rating on Rating Watch Negative (RWN).

The UK bank released a notice to bondholders yesterday (Thursday) saying that the transaction parties had entered into a global deed of amendment to modify the transaction documents in order to remove Fitch from the transaction.

The issuance was put on RWN on 26 March by Fitch after the rating agency had put the UK government’s AAA rating on negative review a week previously. Fitch said that the current overcollateralisation level of the covered bonds, which are backed by loans to UK local authorities, would not protect investors from the impact that a sovereign default would have on the creditworthiness of UK local authorities, and therefore any downgrade of the sovereign would result in a downgrade of the covered bonds, all else being equal.

The rating agency at the same time put on negative review BNP Paribas Public Sector SCF and Bradford & Bingley covered bonds.

Barclays did not respond to enquiries by the The Covered Bond Report’s deadline.

Barclays has not issued benchmarks off the public sector programme, only off its mortgage backed programme.