DBRS will integrate into its European covered bond methodology proposed Preferential Obligations Ratings, the rating agency’s covered bond head said on Wednesday, although the move is not expected to result in any changes to programme ratings.

DBRS released a draft of its new Preferential Obligations Rating (POR) criteria for a 30 day comment period on Monday. The new ratings – named Preferred Obligations Ratings in earlier proposals – would apply to particular obligations and exposures at certain banks that DBRS considers less likely to be bailed-in than senior unsecured debt during an event of bank resolution.

The rating agency said the PORs – which would typically be assigned to banks identified as global or domestic systemically important – would cover, among other obligations, the obligations of a bank as an issuer of covered bonds.

DBRS said that the POR would be expected to be two notches higher than a bank’s Intrinsic Assessment (IA) – which for all the European banks DBRS rates is currently equal to their senior unsecured rating – except when the bank nears the point of resolution. Then, it said, the notching will likely widen to reflect that in the event of senior debt being bailed-in it is more probable that the relevant instruments will avoid bail-in or insolvency and will be included in a going concern entity.

This comes after DBRS in September updated its covered bond methodology to allow Covered Bonds Attachment Points (CBAPs) to be lifted by up to two notches from the senior unsecured ratings of issuers to reflect the impact of the Bank Recovery & Resolution Directive (BRRD). DBRS said at that time that it would probably use PROs as the starting point for its analysis of covered bonds.

At an annual European event held by the rating agency in London on Wednesday, Vito Natale, head of European covered bonds and surveillance at DBRS, said that the proposed PORs would be consistent with its updated covered bond methodology.

He said that under DBRS’s plans, if an issuer has been assigned a POR, is active in a jurisdiction where covered bonds are systemic, and its cover pool assets are “core”, the CBAP for its covered bonds would be equal to the POR.

For covered bonds issued by a bank that has been assigned a POR but which is active in a jurisdiction where covered bonds are not systemic or for which the cover pool assets are not core, the CBAP would be one notch below the POR.

Covered bonds issued by a bank that does not have a POR but which is active in a jurisdiction where covered bonds are systemic could be assigned a CBAP up to one notch higher than the issuer’s senior unsecured rating.

Covered bonds issued by a bank that is neither assigned a POR nor active in a jurisdiction where covered bonds are systemic would be assigned a CBAP equal to the senior rating.

Natale said that the implementation of PORs into DBRS’s covered bond methodology is not expected to have any impact on the ratings of covered bond programmes.

The 30 day comment period for the PORs ends on 16 December.

DBRS rates 23 European covered bond programmes across Portugal, Spain, Italy and Ireland, and Natale said the rating agency is looking to consolidate its coverage in Italy and Spain and expand into other jurisdictions in 2016.