Moody’s upgraded 12 Spanish covered bonds today (Tuesday) following a lifting on Friday of the Spanish sovereign ceiling from A3 to A1.

The rating agency raised the sovereign ceiling alongside an upgrade the same day of Spanish government bonds from Baa3 to Baa2 and their outlook from stable to positive. As reported in The CBR yesterday, analysts had been expecting upgrades to follow.

Nine covered bond programmes were upgraded to the maximum A1 rating allowed by the sovereign ceiling rise. However, under Moody’s Timely Payment Indicator (TPI) framework new ratings for several covered bonds are capped at A2; these include cédulas issued by Bankoa and covered bonds issued by Bankinter and Kutxabank, which have been upgraded from A3 to A2.

As a result of the lifting of the sovereign ceiling, mortgage-backed cédulas issued by Banca March, Banco Santander, Santander Consumer Finance, BBVA, CaixaBank and Caja Rural de Navarra have been upgraded from A3 to A1. Public sector-backed covered bonds issued by Banco Santander, BBVA and Caixabank have also been elevated from A3 to A1.