Fitch downgraded Clydesdale Bank’s sole, £700m (Eu896m) mortgage covered bond from AAA to AA+ yesterday (Thursday), following a downgrade of the UK bank’s IDR to BBB+ resulting from a demerger of its parent from National Australia Bank.

Clydesdale’s parent company, CYBG, demerged from its Australian banking parent, National Australia Bank, on Monday. Fitch subsequently downgraded Clydesdale’s Issuer Default Rating (IDR) from A to BBB+ and changed its Support Rating from 1 to 5 on Tuesday.

“In our view, the demerger removes the provision of any potential future extraordinary support for Clydesdale and for CYBG (over and above an indemnity covering legacy conduct costs),” the rating agency said.

It said that Clydesdale’s and CYBG’s IDRs are now based on the UK group’s standalone financial profile, as defined by its Viability Rating.

Fitch then downgraded Clydesdale’s £700m mortgage covered bond from AAA to AA+ yesterday and removed it from Rating Watch Negative.