Moody’s cut Banca Carige residential and commercial mortgage backed covered bonds from A2 to Baa1 and Baa2, respectively, yesterday (Monday), in line with analysts’ expectations of the impact of an issuer downgrade on Friday.

The rating action was prompted by Moody’s lowering the Italian bank’s rating from Baa3 to Ba2, and is in keeping with the rating agency’s Timely Payment Indicator (TPI) framework.

The TPI assigned to the two obbligazioni bancarie garantite (OBG) programmes is “improbable”, which constrains the rating of Carige’s residential mortgage covered bonds but not the commercial backed programme’s.

The covered bonds remain on review for downgrade to match the status of the issuer’s rating.