Fitch downgrades two Cypriot banks' covered bonds

The ratings agency Fitch has downgraded covered bonds of Cypriot Banks Marfin Popular Bank and Bank of Cyprus (BoC) to BBB- from BBB. 

Fitch announced it maintained Marfin`s programme one bonds to rating watch negative (RWN), while it removed Marfin programme two bonds from RWN. The agency also announced it maintained Bank of Cyprus` covered bonds under RWN. 

According to Fitch, the outstanding Cypriot covered bonds represent €4.2 billion of Fitch-rated debt on aggregate, including €2 billion of bonds issued by Marfin under Programme I (Greek mortgage pool), €1.5 bilion of covered bonds issued by Marfin under Programme II (Cypriot mortgage pool) and €700m of covered bonds issued by BoC (Greek mortgage pool). 

The rating actions follow the downgrade of Cyprus` sovereign rating to `BBB-/ Negative` from `BBB/RWN` on 27 January 2012, and the subsequent downgrades of Marfin and BoC`s` Long-Term Issuer Default Ratings (IDR) to `BB+/Negative` on 2 February 2012.

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