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.

Standard & Poor’s yesterday (Thursday) downgraded mortgage covered bonds issued by Banco BPI by four notches, from AAA to A+.

Fitch downgraded five Portuguese banks, including Banco Comercial Português, Banco Espírito Santo and Banco BPI yesterday (Thursday), because it considers them to have limited funding sources and a reduced ability to raise medium term funding.

Moody’s downgraded four Portuguese covered bond programmes yesterday (Tuesday) after last week cutting the ratings of their issuers on the back of a sovereign downgrade. Two remain on review for downgrade alongside three that have not yet been lowered.

Standard & Poor’s yesterday (Wednesday) downgraded public sector-backed covered bonds issued by Portugal’s Banco BPI by five notches, from AAA to A, under its revised rating methodology. Meanwhile, Moody’s has cut the issuer ratings of eight Portuguese banks, including the country’s six covered bond issuers.

Caixa Geral de Depósitos has become the fourth issuer to cancel a covered bond ratings contract with Standard & Poor’s since the rating agency finalised a new methodology in December. S&P on Friday withdrew the ratings of the Portuguese bank’s mortgage covered bonds after affirming them at AAA and assigning a negative outlook.

Moody’s put seven Portuguese covered bond programmes on review for downgrade yesterday (Wednesday) after taking the same action on the sovereign and then 10 rated Portuguese banks.

Standard & Poor’s yesterday (Wednesday) said that a downgrade of Spain from AA+ to AA, on negative outlook, would not “automatically” trigger cuts of Spanish financial institutions’ ratings, although it downgraded five Portuguese banks on Tuesday after lowering their sovereign’s rating that day.

Fitch yesterday (Tuesday) revised the outlook on Banco Comercial Português and Banco Espírito Santo from stable to negative, but affirmed their ratings and those of Banco Santander Totta and Banco BPI. The rating agency has also affirmed mortgage covered bonds issued by Caixa Geral de Depósitos at AAA.