Nine multi-Cédulas downgraded to junk by S&P
Standard & Poor’s downgraded nine multi-Cédulas from investment grade to sub investment grade on Tuesday, along with a further 11 downgrades, five upgrades and three affirmations. The actions, which were driven by the agency’s CDO methodology, and affect €49bn of securities, were flawed, say bankers.
Postbank: what serves the rating agency may not serve the regulator
Deutsche Postbank AG announced it has entered into a voluntary commitment to maintain nominal overcollateralisation (OC) of its mortgage cover pool above the statutory legal minimum. The commitment was triggered by Fitch’s negative rating action on its covered bonds, which will quickly be remedied, the agency told The Cover. However, whether voluntary overcollateralisation will be there for investors in the event of an issuer’s insolvency under new regulatory arrangements is an open question.
Less stringent NSFR may promote growth – S&P
The latest Basel proposals regarding the net stable funding ratio (NSFR) have been relaxed, in a move possibly motivated by the political will to ensure lending to the real economy, said Standard and Poor’s in a report published on Monday. Bankers said that covered bonds can provide a useful tool for banks to extend the average duration of their liabilities, helping to meet their NSFR target.