Peripherals fall as ECB repo criteria draws focus

14 Jul 2011

The covered bonds of Portuguese and Irish banks are drawing ever closer to sub-investment grade status, though they are likely safe for the summer. Moody’s on July 12 cut Ireland from Baa3 to Ba1 and assigned a Timely Payment Indicator (TPI) of Very Improbable to all Portuguese mortgage-backed covered bonds. Some issuers are rated only by Moody’s, though should the sub-investment rating line be crossed, analysts expect the European Central Bank to alter its criteria for repo eligible collateral.

Moody’s downgraded mortgage-backed covered bonds issued by Caixa Económica Montepio Geral from Baa2 to Baa3, on review for downgrade, following a downgrade of the Portuguese sovereign on July 5.

The rating agency said the sovereign downgrade has negatively affected Portuguese covered bonds through its impact on the TPI. Moody’s ...

Please take a trial or subscribe to access this content.

Contact our subscriptions team to discuss your access: subs@globalcapital.com

Or sign up for a trial to gain full access to the entire site for a limited period.

Free Trial

Corporate access

To discuss GlobalCapital access for your entire department or company please contact our subscriptions sales team at: subs@globalcapital.com or find out more online here.