Standard & Poor’s warned last week that the bulk of 1.46 trillion euros' worth of covered bonds could be downgraded from AAA due to a change in its rating methodology and assumptions. Covered bonds resemble asset-backed securities issued in the United States, but unlike mortgage-backed securities, for example, they are included in an issuer’s balance sheet.

The subprime mortgage crisis caused a wave of downgrades of structured financial products backed by risky home loans and forced rating agencies to revise the way they rated complex debt instruments. Of the U.S. housing market-related securities issued between 2005 and 2007, only 25 percent have retained their AAA ratings, according to S&P’s tally of debt they rate.

AAA-rated securities are attractive for banks, insurance companies, pension funds and other prudentially regulated investment institutions since they don’t have to hold as much capital against them as they would against lower-rated securities.

9 Dec 2009 -

Cutting by committee

24 Apr 2009 -

Feel of disapproval