Moody’s Investors Service modernized Deutsche Bank’s (NYSE: DB) long-term ratings down a notch to A1 from A2 on Wednesday and revised its outlook on long-term deposits and senior debt ratings to stable from positive, due progress of the German lender in achieving its medium-term objectives.
A1 is the fifth highest investment grade credit rating at Moody’s, with Aaa being the highest rating and Baa3 being the lowest investment grade rating. Deutsche Bank (DB) Stocks increased by 1.6% in the Wednesday morning trade in the United States
“Moody’s expects DB’s significantly reduced expense base will allow the bank to preserve operating leverage in a period of temporarily higher inflation and, therefore, defend its newfound earnings strength,” did he declare.
In addition, rising interest rates improved Deutsche Bank’s (DB) outlook for higher returns from its core lending business.
The company’s junior senior unsecured debt ratings are upgraded from Baa1 to Baa2 and its base credit assessment to baa2 from baa3. Short-term ratings were affirmed at P-1, the highest rating for short-term debt.
Baa3 is the third lowest investment grade rating. The BCA rating in the baa range reflects intrinsic or stand-alone financial strength of medium quality and is subject to moderate credit risk and may possess some speculative credit elements.
Deutsche Bank (DB) stock rose last month after its chief financial officer said the bank was on track to top its earnings forecast this year.
Find out why SA contributor Anna Sokolidou considers the stock undervalued.