Standard & Poor’s, the ratings company that granted inflated grades on mortgage debt during the U.S. housing boom, may cut rankings on $187.7 billion of home-loan securities as it changes its method of grading bonds tied to loans from before 2009.

The company’s adjustments also led it to place $16.3 billion of debt under review for upgrades, S&P said in a statement. The New York-based company announced the methodology changes on Aug. 9, saying it expected them to cause more downgrades than upgrades.

Much of the $1 trillion of so-called non-agency home-loan bonds without government backing have been cut to speculative grades of less than BBB- after record defaults on the underlying mortgages and drops in home prices. Almost 97 percent of originally AAA rated securities tied to so-called option adjustable-rate mortgages, or option ARMs, from 2005 through 2007 now carry rankings below B, according to a report by Barclays Plc. For subprime debt, the share is 86.1 percent.

“The overall effect of the methodology change should not be huge, in our view, because much of the non-agency universe is rated below investment grade already,” Barclays analysts led by Sandeep Bordia and Jasraj Vaidya wrote in the Aug. 10 report.

The effects credit ratings have on the capital investors must hold to cushion against losses from the debt also have waned after changes to state regulations for insurers and similar adjustments pending for U.S. banks, the analysts said.

Typical prices for the most-senior bonds tied to option ARMs rose to 61 cents on the dollar last week, from 49 cents in November, Barclays data show. Since the U.S. housing slump began accelerating in 2008, the values have ranged between a low of 33 cents in 2009 and as high as 65 cents in February 2011.

Option ARMs can allow homeowners to pay less than the interest they owe by increasing their balances, while subprime loans were granted to borrowers with poor credit or high debt.