Moody’s upgrades BayernLB, debt, preferreds

Moody's Investors Service said it upgraded Bayerische Landesbank's (BayernLB) long-term deposit and senior unsecured debt ratings to Aa3 from A1, as well as its senior unsecured debt and issuer ratings to A1 from A2.

The outlook on the long-term ratings is stable.

At the same time, the agency upgraded BayernLB's baseline credit assessment (BCA) to baa3 from ba1, adjusted BCA to baa1 from baa2 and long-term counterparty risk assessment to Aa3(cr) from A1(cr). The bank's short-term program and deposit ratings were affirmed at provisional P-1 and P-1, respectively, as well as its short-term counterparty risk assessment at P-1(cr).

As part of this action, Moody's also upgraded BayernLB's subordinated debt ratings to Baa2 from Baa3, junior subordinated debt rating to Baa3 (hyb) from Ba1 (hyb) and the non-cumulative preferred stock rating of BayernLB Capital Trust I to Ba2 (hyb) from Ba3 (hyb).

Moody’s said the upgrade reflects the continued strengthening of the bank's financial fundamentals, in particular the improvement of its capitalization and asset quality, including the agency’s assessment of lower tail risks in BayernLB's remaining non-core exposure.

The stable outlook reflects the expectation that BayernLB will be able to sustain its more solid credit metrics going forward.

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