Standard & Poor’s downgraded cédulas hipotecarias issued by Ibercaja Banco from A+ to A yesterday (Tuesday) after cutting the Spanish bank’s issuer rating to BB on Friday.

The mortgage covered bonds already benefited from a maximum six notch uplift over Ibercaja’s rating available to them under S&P’s methodology, so the issuer downgrade resulted directly in the cédulas downgrade.

The six notch uplift is possible because S&P has assessed Ibercaja’s programme as being in category 2 under its framework and with “low” asset-liability mismatch risk, and the rating agency said that based on the latest information it received the overcollateralisation available to support Ibercaja’s covered bonds can sustain the maximum uplift.

The covered bonds are on negative outlook and, all else being equal, any negative rating action on the issuer would automatically result in a corresponding change to the covered bonds, said S&P.

Ibercaja’s rating was cut from BB+ to BB because of its acquisition of Banco Cajatres.