Moody’s raises Depfa to Baa2

Moody's Investors Service said it upgraded the long-term senior unsecured debt ratings of Depfa Bank plc to Baa2 from Ba1 and the deposit ratings of Depfa and its fully owned subsidiary Depfa ACS Bank to Baa2/Prime-2 from Ba1/Non-Prime.

Concurrently, the agency upgraded the counterparty risk assessments of the two banks to Baa2(cr)/P-2(cr) from Baa3(cr)/P-3(cr), and their baseline credit assessments (BCAs) to ba3 from b2.

The outlook on Depfa’s long-term debt and deposit ratings and on Depfa ACS' long-term deposit ratings is stable.

Moody’s said the actions reflect its assessment that Depfa’s and Depfa ACS' fundamental credit profiles benefit from improving capitalization and a stable funding profile owing to their progress in unwinding Depfa group's assets and preserving capital in the process.

The upgrade also takes account of the additional positive impact on the group's credit profile that the agency expects from the €5.3 billion asset sale, which Depfa group announced on Oct. 14, and which Moody's understands will be concluded within the next few weeks.

Given Depfa’s focus on a capital preserving run-down of its balance sheet, Moody's expects that the transaction will enhance the group's capitalization and reduce market risk linked to the portfolios that will be sold.

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