Moody’s downgraded covered bonds issued out of Nykredit Capital Centre D from Aaa to Aa1 this (Friday) morning and placed BRFkredit covered bonds on review for downgrade. It withdrew its ratings of Realkredit Danmark covered bonds.

On review for downgrade from BRFkredit are covered bonds from its General Capital Centre rated Aa3, Capital Centre B rated Aa3, and Capital Centre E rated Aa2.

“The rating of BRF’s covered bonds is placed on review for downgrade to reflect ongoing discussions with BRF on their plans for the programmes,” said Moody’s.

The rating agency said that in the review it would consider a BRF proposal to restructure the programmes, possibly including the transfer of adjustable mortgage rate (ARM) loans into a new Capital Centre H, as well as the addition of further collateral to existing programmes.

“In case of the General Capital Centre, BRF is also exploring with the Danish FSA whether it is possible to add collateral in a form Moody’s considers ‘committed’,” it added.

The reviews and BRFkredit’s proposals come after Moody’s on 1 July downgraded the bank from Baa1 to Baa3.

Moody’s action on Nykredit’s covered bonds came after Nykredit Realkredit was cut from A1 to A2 on the same day, with the issuer also having initiated a series of changes to its strategy to bolster its funding programmes, partly in light of changes to Moody’s analysis of Danish covered bonds.

The rating agency said that the downgrade of Nykredit Capital Centre D covered bonds from Aaa to Aa1 reflected the level of collateral now being consistent with a Aa1 rating. It said that it was satisfied that Nykredit’s plans would bring collateral levels into line with its expectations for all the covered bonds it rates.

Moody’s affirmed the ratings of other Nykredit group covered bonds and some issued by DLR Kredit: Nykredit Capital Centre E at Aaa, Nykredit Capital Centre C at Aa1, Nykredit General Capital Centre C at Aa1, Totalkredit Realkreditfond Capital Centre C at Aaa, DLR Capital Centre B at Aa1, DLR General Capital Centre at Aa1, and Nykredit Capital Centre G at Aa3.

Moody’s withdrew the ratings of Realkredit Danmark’s covered bonds, citing “its own business reasons”, after the Danske subsidiary last month said that it would be terminating its relationship with the rating agency.

Moody’s noted that covered bonds issued by Realkredit General Capital Centre were previously rated Aaa and those of Realkredit Capital Centre S were Aaa, on review for downgrade.

The covered bonds remain AAA rated by Standard & Poor’s and Realkredit Danmark has indicated an interest in potentially seeking a rating for the covered bonds from Fitch.