Moody’s lowers Deutsche Bank long-term debt

Moody’s Investors Service said it upgraded Deutsche Bank AG’s long-term deposits to A2 from A3 and downgraded its long-term debt to Baa1 from A3.

All of the bank’s short-term ratings were upgraded to prime-1 from prime-2.

The agency also said it assigned a negative outlook to the bank’s debt and deposit ratings.

The ratings reflect the changes in protection offered to depositors and senior creditors captured by the agency’s advanced Loss Given Failure (LGF) analysis, Moody’s said.

The changes in protection result from the subordination of certain senior unsecured debt obligations relative to other senior liabilities, including deposits, the agency said.

The negative outlook reflects the near-term execution challenges related to the bank’s new strategic plan, which is pressuring the bank’s creditworthiness, Moody’s said.

Heightened competition and low interest rates also limit the profitability of German banking, the agency said, and Deutsche Bank must also contend with the expense of maintaining a global capital markets footprint.

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