Moody's affirmed the ratings of Credit Suisse AG following Credit Suisse Group AG's settlement in principle with the U.S. Department of Justice regarding civil claims in connection with the bank's issuance and underwriting of residential mortgage-backed securities conducted through 2007.
The outlook is stable.
The affirmation reflects Moody's view that the settlement is positive for Credit Suisse's creditors since it substantially reduces litigation tail risk and the expected impact on capital ratios is manageable, notwithstanding the large dollar amounts involved.
The settlement includes $2.8 billion in consumer relief expected to be delivered primarily in the form of loan modifications over a period of five years from settlement, which is not expected to have a material impact on 2016 results.
The settlement reduces uncertainty, and will improve management's ability to focus on the execution of its updated strategy, which will benefit bondholders if successfully achieved, Moody's said.