...Bank Support Negative Influence: Of the 132 covered bond programmes rated by Fitch at end-November 2014, 20% had a Negative Outlook, mainly peripheral eurozone programmes, while the rest had a Stable Outlook. Two-thirds of those on Negative Outlook are sensitive to the potential weakening of bank support due to senior bail-in. Once rating actions on banks' Issuer Default Ratings (IDR) on Negative Outlook for support reasons are taken towards mid- 2015, 17 programmes could be downgraded, four of which potentially to non-investment grade. Bail-in Exemption Counteracts: Acknowledging the exemption of most covered bonds from bail-in, a total of 109 notches of IDR uplifts ranging from zero to two were assigned in 2014 to 95 programmes, many of which were already at high rating levels. In such cases, greater buffers exist and, in others, it neutralises downward pressure from sovereign support-related issuer downgrades. Regulatory Initiatives Credit Positive: If implemented in national laws, best...
