Standard & Poor’s announced that its new rating criteria for covered bonds will not be ready for publication until at least September.
The rating agency presented the draft of its new approach at the beginning of February introducing the threat that around 60% of covered bond programs would no longer meet the new rating requirements. It also introduced the prospect of higher over-collateralization requirements, which was certain to add pressure to the covered bonds market.
The new approach was largely viewed as negative by covered bonds market participants in Europe but analysts at Dresdner Kleinwort say that the fact that S&P is taking so much time over its revision could be a sign that the agency is making corresponding, significant corrections.
“We already expected the eventual rating effects to be a good deal milder,” said analysts. “This could also be supported by the fact that that the agency could harm its long-term standing by adopting an overly aggressive stance – since early June two German issuers already asked for their S&P Pfandbrief (covered bonds) ratings to be withdrawn.”