Moody’s upgrades BNP Paribas

Moody's Investors Service said it upgraded BNP Paribas’ long-term deposit and issuer ratings to Aa3 from A1, senior unsecured debt and program ratings to Aa3/provisional Aa3 from A1/provisional A1 and junior senior unsecured debt (known as senior non-preferred securities) and program ratings to Baa1/provisionalBaa1 from Baa2/provisional Baa2.

The upgrades were prompted by the agency’s expectation of significant issuance of additional loss-absorbing capital in response to forthcoming regulatory requirements.

"The bank has announced it will issue around EUR10 billion of junior senior unsecured debt per year under its medium- and long-term funding programme, in order to meet minimum total loss absorbing capacity requirements," Moody’s senior vice president Andrea Usai said in a news release.

"Moody's expects that BNPP will continue its issuance programme in line with its medium-term plan, based upon the bank's continued good access to the capital markets."

This issuance will reduce loss severity for senior unsecured and junior senior creditors, as well as junior depositors, according to Moody's revised advanced Loss Given Failure (LGF) analysis. The revised LGF analysis was undertaken following updates to Moody's Banks rating methodology, published on Sept. 26.

Moody's also affirmed the baa1 standalone baseline credit assessment (BCA) of BNP Paribas, reflecting that the bank's improved asset risk and capitalization have offset negative pressures from a weaker operating environment. The bank's Aa3(cr)/Prime-1(cr) counterparty risk assessment, its other long-term ratings and the Prime-1 short-term ratings were affirmed at their current levels, the agency said.

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