Portugal

Moody’s on Friday placed on review for possible downgrade covered bonds issued by five Portuguese issuers after placing the issuers’ ratings on negative review the day before.

Moody’s placed Portugal’s covered bond issuers on review for possible downgrade yesterday (Thursday) because of their high reliance on central bank liquidity, the potential impact of planned austerity measures by the Portuguese government, and a more uncertain operating environment.

Standard & Poor’s today (Friday) placed five Portuguese covered bond issuers on negative review after it on Tuesday took the same rating action on the Portuguese sovereign [amended].

Fitch affirmed mortgage backed covered bonds issued by Caixa Económica Montepio Geral at AA yesterday (Thursday) after increasing the programme’s Discontinuity Factor following a review of the legal and regulatory framework for Portuguese covered bonds.

Fitch placed AAA rated mortgage covered bonds issued by Banco Espírito Santo, Millenium BCP, and Banco BPI on negative review yesterday (Tuesday), following a downgrade of the banks’ ratings the previous day.

Fitch will in the coming weeks reassess Discontinuity Factors assigned to Portuguese covered bond programmes after a review of its analysis of the country’s covered bond framework revealed that the latter leaves “some residual exposure” to an issuing financial institution, the rating agency said yesterday (Wednesday).

Fitch downgraded mortgage backed covered bonds issued by Caixa Económica Montepio Geral from AAA to AA, on negative review, yesterday (Tuesday), because of new asset analysis assumptions for Portuguese mortgages.

Fitch downgraded Caixa Económica Montepio Geral from A- to BBB+ , on Rating Watch Negative, yesterday (Thursday), because the Portuguese bank is facing increasing difficulty in defending its asset quality and maintaining operating profitability amid low interest rates and limited prospects for economic growth in Portugal.

Standard & Poor’s cut mortgage covered bonds (obrigações hipotecárias) issued by Portugal’s Banco Espírito Santo from AAA to A+, on negative outlook, on Friday, before withdrawing its rating at the issuer’s request.

Standard & Poor’s yesterday (Wednesday) upgraded mortgage covered bonds issued by Portugal’s Banco BPI from A+ to AA, on stable outlook, because of improvements in the programme’s cash flow profile and higher overcollateralisation.

Fitch placed Portuguese bank Caixa Económica Montepio Geral on Rating Watch Negative yesterday (Wednesday), because the bank’s owner, Montepio Geral Associação Mutualista (MGAM), announced its intention to launch a takeover bid for Finibanco-Holding SGPS. Montepio Geral’s covered bonds were unaffected by the rating action.

Moody’s yesterday (Wednesday) downgraded covered bonds of four Portuguese banks because of the negative impact on its expected loss analysis of downgrades of the issuers.