Moody's and Fitch Ratings on March 23 took positive ratings actions on Credito Valtellinese SpA, following the successful completion of its €700 million rights issue.
Moody's affirmed the Italian lender's Ba3/Not Prime long- and short-term bank deposit ratings and revised the outlook on the long-term rating to positive from developing. Creval's baseline and adjusted baseline credit assessments were upgraded to "b2" from "caa1", and its long-term counterparty risk assessment was raised to Ba2(cr) from Ba3(cr).
Moody's said the capital increase and planned bad loan reduction improved the bank's stand-alone creditworthiness, leading to an upgrade in its baseline credit assessment. The outlook revision is based on the agency's view that the risk of failure for the bank has diminished and the increased likelihood that the lender will make progress towardsits business plan targets for the period between 2018 and 2020.
Meanwhile, Fitch upgraded Creval's long-term issuer default rating to BB- from B-, removed the rating from Rating Watch Evolving and assigned it a positive outlook.
The lender's viability rating was upgraded to "bb-" from "b-" and removed from Rating Watch Evolving. The rating agency also affirmed the bank's B short-term issuer default rating, 5 support rating and No Floor support rating floor. The short-term issuer default rating was removed from Rating Watch Negative.
Fitch noted that the upgrade of Creval's ratings is mainly based on the successful completion of its rights issue and the agency's expectation that the bank will dispose of €2.1 billion of impaired loans through two transactions, which are already in progress, during 2018. The positive outlook reflects Fitch's view that the bank's overall financial profile will benefit from the planned NPL disposal, with the lender to return to moderate profitability.