Avondale Securities life insurance-linked securities downgraded by S&P

by Artemis on February 4, 2011

Standard & Poor’s have today downgraded the ratings of two tranches of life insurance-linked notes issued by Avondale Securities SA. The notes issued by Avondale Securities, a special purpose vehicle set up in Luxembourg by the Bank Of Ireland, were designed to transfer a block of life insurance risk to the capital markets through securitisation to allow Bank of Ireland to monetize the expected value in force of a block of life insurance policies.

S&P downgraded the credit rating of the Bank of Ireland on February 2nd and due to the link between them and this transaction (Bank of Ireland are obligated to meet payments under certain circumstances on these notes) has taken this action on the Avondale notes.

The Class A-1 and Class A-2 tranches of Avondale Securities SA have both been downgraded from ‘BBB+’ to ‘BB+’ and both remain on credit watch negative.

Moody’s downgraded the notes in December (our coverage here).

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