Fitch placed Banca Popolare di Milano covered bonds, rated A-, on Rating Watch Negative today (Tuesday) to reflect the RWN status assigned to the issuer on Friday, and affirmed at BBB+ covered bonds issued by Banca Carige.

The A- rating of BPM’s obbligazioni bancarie garantite (OBG) does not incorporate any buffer against a downgrade of the issuer, said Fitch, and this is why the covered bonds have been placed on negative review after the issuer was placed on RWN.

The affirmation of Carige’s OBGs comes after the rating agency on Friday downgraded the Italian bank from BB+ to BB. Fitch said that the Issuer Default Rating, a Discontinuity Cap (D-Cap) of 1 and an asset percentage (AP) commitment of 80% allow the OBG to stay at the BBB+ level.