Commerzbank was upgraded to A- from BBB+ by S&P due to its “substantial and sustainable buffer of bail-in-able debt instruments”. S&P says this will provide additional protection to senior creditors in case of a resolution. Its additional loss-absorbing capacity (ALAC) ratio of 6.5% exceeds S&P’s 6% threshold. S&P believes Commerzbank will reach its 2024 financial targets and is on track in its multiyear transformation. The rating agency further added that it thinks the bank will be able to distribute “meaningful amounts of capital, reducing its risk-adjusted capital buffers over time”. Moreover, Commerzbank’s CET ratio of 14.1% adds to its significant level of buffers, helping with the upgrade.
Commerzbank’s EUR-denominated bonds were trading higher with its 6.5% Perp up by 1.1 points to 78.25, yielding 10.43%.