Moody’s cuts SBAB debt, preferreds

Moody's Investors Service said it confirmed SBAB Bank AB (publ)'s A2 long-term issuer and senior unsecured ratings and Prime-1 short-term rating, with a negative outlook for long-term ratings.

The confirmations reflect Moody's view that the bank's low profitability and limited capital generating ability are in line with its limited credit risk as a mortgage lender.

The negative outlook for senior debt reflects the increased probability that Moody's reduces the systemic support uplift for senior debt, following the introduction of the Bank Recovery and Resolution Directive.

At the same time, the agency downgraded SBAB Bank's subordinated debt rating to Baa3 from A3 and preferred stock rating to Ba2(hyb) from Ba1(hyb), with stable outlooks.

Going forward, the ratings for these debt classes will be notched off SBAB's baa2 baseline credit assessment and no longer incorporate systemic support.

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