"Consequences" for S&P from Revised Covered Bond Methodology?

"Having opted to stick with its proposed revised ratings methodology for covered bonds, first announced in February last year, S&P is now experiencing the consequences of having tougher ratings criteria."

That is the theme of a Financial Times ft.com/alphaville posting (Jan. 21) by Tracy Alloway.

In essence, the revised Standard & Poor's methodology for rating covered bonds puts much more emphasis than previously on the credit rating of an issuing bank, in addition to the traditional focus on characteristics of the covered bond program itself (such as cover pool quality).

The gist of Alloway's posting: We may now be seeing evidence that covered bond issuers may react by avoiding S&P's services in this arena.

Related stories:

• Standard & Poor's Proposes Major Change to Covered Bond Rating Methodology

• Reuters: Looming S&P Decision Casts CB "Ratings Cloud"

• S&P Releases Revised Covered Bonds Rating Methodology - Update