Moody’s cut obligations foncières issued by CIF Euromortgage from Aa1 to Aa2 yesterday (Thursday) after cutting sponsor bank Caisse Centrale du Crédit Immobilier de France (3CIF) from Baa1 to Baa2, and left them on review for downgrade.

The Aa2 rating is the level at which the covered bonds are capped under Moody’s methodology given a Timely Payment Indicator of “probable-high” and the sponsor bank’s Baa2 rating.

The review for downgrade matches that of 3CIF, which was downgraded earlier yesterday and had its review changed from direction uncertain. Moody’s said that the downgrade and negative review reflect its view of the issuer’s creditworthiness following the French government’s decision to place the bank in run-off mode, with a guarantee in favour of the bank so that CIF can meet all of its obligations, after it failed to find a strategic buyer for the troubled group.

The state guarantees still need to be approved by the European Commission and French parliament, the rating agency noted.