Moody’s drops Council of Europe to Aa1

Moody's Investors Service said it downgraded the long-term issuer rating of the Council of Europe Development Bank and debt ratings by one notch to Aa1/provisional Aa1 from Aaa/ provisional Aaa.

The agency concurrently affirmed Council of Europe’s P-1 short-term rating.

The outlooks were changed to stable from negative.

While Moody’s agency noted improvement in some key credit metrics, this action reflects a repositioning of Council of Europe rating vis-a-vis its peer group and is driven by the following two factors: (a) Council of Europe’s high leverage weighs on intrinsic financial strength, particularly relative to other highly rated multilateral development banks (MDBs); and (b) weaker shareholder support – especially extraordinary support – than Aaa-rated MDBs.

Supporting the Aa1 rating is the Council of Europe’s still exceptionally strong liquidity levels and conservative risk management policies and practices, which has ensured good performance of its loan book, Moody’s said.

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