Fitch cut the rating of Bradford & Bingley mortgage covered bonds from AAA to AA+ yesterday (Tuesday) following a downgrade of the UK sovereign.

Fitch downgraded the UK from AAA to AA+ on Friday citing “a weaker economic and fiscal outlook” as the main driver of the rating action.

Bradford & Bingley (B&B) covered bonds are based on a guarantee from the HM Treasury, so the downgrade of the UK sovereign rating had a direct impact on the creditworthiness of B&B’s covered bonds, said the rating agency.

As part of the rating action Fitch also removed B&B covered bonds from Rating Watch Negative, on which it had placed them on 26 March alongside public sector covered bonds issued by Barclays and BNP Paribas Public Sector SCF covered bonds after putting the UK sovereign on negative review (See here for previous coverage).

Barclays removed Fitch from the documentation of its public sector covered bond programme last Friday (See here for previous coverage).