Moody's ups Council of Europe bank

Moody's Investors Service said it upgraded the Council of Europe Development Bank's (CEB) Aa1 long-term issuer and senior unsecured ratings as well as its (P)Aa1 senior unsecured shelf and senior unsecured medium-term note program ratings to Aaa and (P)Aaa, respectively.

The agency also revised the outlook to stable from rating under review. In a press release, Moody’s said it started the review on Dec. 16 after the bank’s governing board approved a “very significant increase of the bank's paid-in and callable capital.”

“The decision to upgrade the ratings to Aaa is driven by Moody's assessment that CEB's creditworthiness is materially improved by the significant capital increase approved in December 2022. In particular, this will lead to a reduction in the bank's leverage and has resulted in an improvement to Moody's assessment of the strength of member support.

“While CEB on the back of the capital increase will continue to grow its balance sheet, including by lending to Ukraine (Ca stable), Moody's expects that it will do so in a way that does not offset the benefits its credit profile will derive from the capital increase.

Moody's said it anticipates the benefits CEB will reap from the recently agreed capital increase will continue to strengthen the bank's credit profile and be greater than any increase in risks to its asset portfolio from a gradually increasing exposure to Ukraine.

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