S&P followed up a downgrade of Italy with a raft of downgrades and negative reviews for Italian banks and their subsidiaries on Friday, with UniCredit the focus in covered bonds as a downgrade from BBB+ to BBB could result in a cut to its OBG rating.

Standard & Poor’s cut Italy from BBB+ to BBB on Tuesday, on negative outlook, triggering downgrades of nine Italian banks that were rated above the new sovereign rating. The rating cut Intesa Sanpaolo from BBB+ to BBB, and six other covered bond issuers were put on negative review.

The rating agency said that it rarely rates financial institutions above the foreign currency rating of their host sovereign when they have more than 40% of their assets in that country, which applies to Intesa and UniCredit.

Bernd Volk, head of covered bond research at Deutsche Bank, noted that of publicly issued obbligazioni bancarie garantite (OBGs), S&P only rates UniCredit’s, and that the sovereign downgrade therefore has a negligible impact on OBG ratings. UniCredit covered bonds will probably be cut from AA+ to AA, he added.

S&P also rates retained Mediobanca covered bonds, according to Volk, and Mediobanca was one of the nine Italian banks to have its ratings cut from BBB+ to BBB.

S&P also placed on CreditWatch negative the ratings of UniCredit Bank (A) and UniCredit Bank Austria (A-), and the ratings of 23 Italian banks, including Banca Popolare di Milano (BB+), Banco Popolare (BB+), Credito Emiliano (BBB), and Unione di Banche Italiane (BBB).

“We anticipate the factors behind the sovereign rating action could have negative implications for our view of the economic and industry risks affecting the Italian banking industry,” said S&P, “as well as some of the specific factors that we take into consideration when assessing Italian banks’ creditworthiness.”

S&P said that it expects to resolve the CreditWatch placements over the coming weeks.