Moody’s today (Monday) downgraded public sector covered bonds issued by Austria’s nationalised Hypo Alpe Adria Bank International, which is at the focus of a politically charged attempt to find a way to wind down the institution.

The rating agency cut HAA’s guaranteed public sector covered bonds from Aaa to Aa2, on review for downgrade, and downgraded the unguaranteed covered bonds from Aa2 to A3, with the rating remaining on review, direction uncertain.

The rating action on the guaranteed covered bonds follows a recent downgrade of the senior unsecured debt rating of HAA from A1 to Baa2, on review for downgrade, while the lowering of the unguaranteed covered bonds was mainly driven by what Moody’s said is a “lack of transparency towards their future positioning in case of HAA’s resolution”.