LONDON, May 10 (Reuters) - The Bank of England said on Monday that it would not automatically exclude sovereign collateral from use in its money market operations even if more than one ratings agency downgrades it below Aa3. Government bonds rated Aa3 or higher are normally automatically eligible for use as collateral in the Bank of England's cash transfer services and repo operations. However, downgrades below this level would not automatically bar collateral from being used, the BoE said in what it described as a "clarification" of its existing rules. "Should collateral be downgraded below the minimum credit ratings set out above, the Bank wiould normally seek to understand the circumstances of the downgrade before determining whether tha merited any change to the security's eligibility," the BoE said. The BoE added that it could impose additional haircuts instead of totally excluding an asset as collateral. (Reporting by David Milliken) Keywords: BRITAIN BANK/COLLATERAL (Reuters Messaging: email@example.com; firstname.lastname@example.org; +44 20 7542 5109) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
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