Deutsche Bank AG (DB), the largest German bank with total assets of €1.3tn as of March 31, has been upgraded to A2 from A3 by Moody’s with a positive outlook, maintaining solid capital and liquidity buffers as they are set to meet their medium term targets. Moody’s said that its ‘junior senior unsecured debt ratings have been raised to Baa2 from Baa3’ and the Baseline Credit Assessment (BCA) to baa3 from ba1. The rating agency said it believes DB “will be able to safeguard achievements in growing revenues and earnings and keep contained revenue or market share declines in its capital markets business in a less favourable market environment… Further, additional earnings strain from the persistent ultra-low interest-rate environment is likely to fade from late 2021 onwards, offering the potential for higher earnings”. The rating action also considers government support for junior depositors and senior unsecured creditors and expects DB to maintain a prudent and well controlled risk appetite. A further upgrade could be on the cards if the bank is able to achieve returns at or above its 8%, while strengthening its technology platform and control infrastructure. The bank is rated BBB+ by Fitch and S&P.
Deutsche Bank’s 1.5% 2022s and 7.125% perps were stable at 100.85 and 109.6 respectively.
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