The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

S&P's refined approach

Issuers have taken the keenest interest in Moody's covered bonds policy, but Standard & Poor's announced in October that it was refining its approach to rating European covered bonds. The rating agency said that the variety of legislation in Europe meant that investors were asking it to clarify how it rated covered bonds. Specifically, investors want timely payment, and reassurance on how their investments are likely to be affected by the insolvency of an issuing bank.

Asset pool emphasis

While the debate surrounding Moody's approach focuses on its attitude to delinkage, S&P is looking at asset pools.

"We are formalizing and making more transparent two aspects of our rating analysis on covered bonds in jurisdictions where the analysis focuses primarily on the asset pool, and is to a large extent already delinked from the issuer's counterparty rating," says Alain Carron, managing director at S&P's structured finance ratings group in London. "The two aspects being clarified are the cover pool's access to liquidity and the level of overcollateralization available."

To monitor more closely sudden insolvency risk, which varies wildly from jurisdiction to jurisdiction, S&P will ask covered bond issuers to report the cover pool's liquidity needs in a run-down simulation for the coming six months.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree