DBRS cut cédulas hipotecarias of Banco Popular Español and subsidiary Banco Pastor from AA high to AA yesterday (Tuesday), and obrigações hipotecárias (OHs) of Banco Popular Portugal from BBB to BBB low, after downgrading the parent on the back of weak results.

The downgrades came after parent Banco Popular Español was on 10 February downgraded, its senior unsecured rating from BBB high to BBB, with a negative trend, and its Critical Obligations Rating (COR) from A to A low.

DBRS said it has concerns over the bank’s weakened capital position following a higher than anticipated Eu3.5bn net loss in 2016 announced on 3 February, and continued challenges it faces in tackling non-performing assets.

Banco Popular Español has 29 cédulas series totalling some Eu18bn outstanding but Pastor, which was taken over in the wake of the financial crisis, just one, of Eu1bn.

Banco Popular Portugal’s senior unsecured rating was cut from BB high to BB low, with a negative trend, on the same day Banco Popular Español’s ratings were lowered, and the downgrade of the Portuguese bank’s covered bonds followed this. Banco Popular Portugal has three series with a nominal amount of Eu815m outstanding, according to DBRS.