Downgraded European sovereigns saw ratings on their covered bonds lowered at levels ten times higher than those from more stable European sovereigns, according to a Moody's Investors Service special comment published today.

Moody's based its rating migration study on the performance of European covered bonds outstanding as of January 1, 2008. The analysis is split between covered bond performance in countries that have experienced a sovereign downgrade during the crisis and sovereign ratings that  have not been downgraded over this time period. The rating agency found that a divide persisits between the  performance of covered bonds of stable sovereigns and downgraded sovereigns.

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