Banco CEISS mortgage covered bonds were cut by two notches from Baa3 to Ba2 by Moody’s yesterday (Thursday), after the Spanish bank was downgraded from B1 to B3 on Tuesday.

Downgraded Banco CEISS, Moody’s cited a decrease in the bank’s financial strength and a change in the bank’s restructuring schedule.

Banco CEISS cédulas hipotecarias were left on review with direction uncertain as a result of “uncertainties” deriving from a merger between Banco CEISS and Unicaja Banco, said Moody’s.

“The merger of these two banks was approved in September 2011, but it has been repeatedly delayed as a result of Banco CEISS’s very weak credit profile,” said the rating agency. “Although the merger has not been formally cancelled by either bank, it is likely to be further postponed until Banco CEISS has accomplished its restructuring plan.”