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Moody’s ups Greek banks’ debt to Caa3
Moody's Investors Service said it affirmed the Caa3 long-term deposit ratings of Alpha Bank AE, Eurobank Ergasias SA, National Bank of Greece SA and Piraeus Bank SA.
At the same time, the agency upgraded all four banks' baseline credit assessments (BCA) to caa2 from caa3, long-term senior unsecured ratings to provisional Caa3 from provisional Ca and long-term counterparty risk assessments to Caa2(cr) from Caa3(cr).
The long-term deposit ratings for Alpha Bank and National Bank of Greece carry positive outlooks, while those of Eurobank Ergasias and Piraeus Bank carry stable outlooks.
Attica Bank SA’s long-term deposit ratings were affirmed at Caa3 with a stable outlook, as well as its BCA of caa3, while the counterparty risk assessment was upgraded to Caa2(cr) from Caa3(cr).
Moody’s said the actions follow the successful completion of Greece's second review for its support program, which also triggered an upgrade of Greece's government bond rating to Caa2 (positive) from Caa3 (stable). The higher BCAs primarily reflect the improved operating environment in Greece, which resulted in the agency raising the country's macro profile to “very weak+” from “very weak,” as well as improvements in banks' funding profile, lower funding costs, the return to marginal core profitability and the likely continuation of this trend in 2017-18.
In addition, the BCAs also take into account the prospects for further modest improvements in banks' financial fundamentals stemming from the potential return of more deposits into the banking system and gradual reduction of nonperforming loans, as the economy starts to show signs of recovery, the agency explained.
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