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Julius Baer Group’s AT1s have been downgraded by a notch to Ba1 from Baa3 by Moody’s. Along with it, the deposit ratings and senior unsecured debt ratings of its subsidiary, Bank Julius Baer & Co. Ltd’s (BJB) were also downgraded by a notch to A1 and A3 respectively. The downgrade reflects the higher risk emanating from concentration in the loan book of Julius Baer Group following its disclosure of having large exposures to a European conglomerate (Signa Holding GmBH) requiring additional loan loss provisions. According to Moody’s, it highlights the shortfalls in the corporate governance practices of the company in relation to money laundering. Moody’s has a negative outlook on the entities, reflecting the potential for a further weakening of Julius Baer’s risk profile if it fails to effectively address its governance, risk culture, and risk appetite.
Julius Baer’s dollar bonds have been trading higher after a large down-move in November with its 3.625% Perp at 72.4 cents on the dollar, yielding 12.1%.