Moody's on Feb. 27 upgraded Caixa Geral de Depósitos SA's long-term bank deposit and senior unsecured debt ratings to Ba3 from B1, with stable outlooks, following the Portuguese state-owned lender's announcement of its 2017 results, which the rating agency noted showed stronger-than-expected performance and improvements in the bank's financial fundamentals.
The agency also upgraded the bank's baseline and adjusted baseline credit assessments to "b1" from "b2" and affirmed its long- and short-term counterparty risk assessments at Ba1(cr)/NP(cr).
Moody's said the upgrade of the bank's BCA reflects the faster-than-expected improvements in its credit fundamentals. The agency considers that the bank is gradually delivering on the targets of its restructuring plan, particularly in terms of asset risk and profitability, it noted.
The upgrade incorporates Moody's expectation of a further improvement in the bank's asset risk on the back of Portugal's economic growth prospects, as well as the bank's intention to continue focusing on recoveries, write-offs and the completion of further nonperforming loan sales in the market, the agency said.
Meanwhile, Moody's said the upgrade of the bank's long-term deposit and senior debt ratings reflects the upgrade of the BCA; the result from the agency's advanced loss given failure analysis that currently reflects no uplift from the bank's "b1" adjusted BCA; and one notch of uplift from Moody's assumptions of moderate government support.
