Moody's cuts Lloyds Banking unsecured

Moody's Investors Service said it downgraded Lloyds Banking Group plc's senior unsecured debt ratings to A3 from A2 and trimmed Lloyds Banking Group's subordinated debt ratings to Baa1 from A3 and its backed junior subordinated debt ratings to Baa2(hyb) from Baa1(hyb).

Concurrently, the agency affirmed Lloyds Bank plc's senior unsecured debt ratings at A1, but lowered Lloyds Bank's subordinated debt ratings to Baa1 from A3 and its junior subordinated debt ratings to Baa2(hyb) from Baa1(hyb).

“Today's one-notch downgrade of Lloyds Banking Group's senior unsecured debt ratings to A3 from A2 was prompted by the expected reduction in the volume of this loss-absorbing debt class, relative to the future size of the bank's balance sheet. This development results in a higher loss severity for senior debt under Moody's advanced loss given failure (LGF) analysis. Moody's LGF analysis now indicates a moderate loss-given-failure for senior unsecured debt, resulting in no uplift from the bank's a3 Adjusted BCA, while the previous LGF analysis resulted in a low loss given failure and one notch of uplift.

The outlook is stable for both companies.

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