Standard & Poor’s placed Depfa public sector-backed covered bond ratings on CreditWatch negative (CWN) yesterday, following similar actions to the issuers ratings’ on Friday.

Depfa Bank’s Ireland-based subsidiary, Depfa ACS Bank, had its BBB rating placed on CreditWatch negative by S&P, as did its Luxembourg-based subsidiary Hypo Pfandbrief Bank International.

The BBB rating of Depfa ACS Bank’s covered bonds does not benefit from any rating uplift over the issuer’s rating because overcollateralisation is below the level necessary for S&P to grant any uplift, it said.

Hypo Pfandbrief Bank International’s covered bonds currently benefit from two notches of rating uplift, which is the maximum possible for them under S&P’s methodology. The rating agency noted that they have no unused notches of uplift that could offset a downgrade of the issuer.