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Investing.com -- Moody’s Ratings has upgraded Raiffeisen Bank Zrt.’s (RBH) senior unsecured debt ratings to Baa2 from Baa3, the credit rating agency announced on Friday. The outlook on these ratings remains stable.
The upgrade also applies to RBH’s senior unsecured MTN program ratings, which have been raised to (P)Baa2 from (P)Baa3. All other ratings and assessments of the bank were not affected by this action.
According to Moody’s, the one-notch upgrade reflects RBH’s baa3 Baseline Credit Assessment (BCA) and Adjusted BCA. A key factor in the decision was the bank’s issuance of material volumes of bail-in-able junior senior unsecured debt, which exceeded Moody’s previous expectations.
This increased debt issuance provides higher loss absorption for senior unsecured debt holders due to the significantly higher volumes of debt subordinated to this debt class. The rating agency’s Advanced Loss Given Failure analysis supported raising the rating uplift by one notch from previously no uplift.
The stable outlook indicates Moody’s expectation that RBH will maintain its current financial profile and liability structure over the next 12 months.
Looking ahead, RBH’s senior unsecured debt ratings could be upgraded if the bank’s BCA improves beyond current expectations or if it issues considerably more loss absorbing debt than anticipated. Conversely, a downgrade could occur if the bank’s BCA is lowered or if significant changes to its liability structure lead to higher loss severity for senior creditors.
The bank’s BCA itself could face a downgrade if there is a significant weakening of its solvency profile, particularly through a sharp deterioration in asset quality or reduction of capital beyond current expectations.
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