Moody's on Jan. 23 upgraded Millennium BCP's baseline credit assessment and adjusted baseline credit assessment to "b2" from "b3" following the lender's announcement of a planned €1.33 billion rights issue.

The rating agency believes the capital increase will enable the Portuguese bank to strengthen its loss absorption capacity in the face of existing substantial asset quality challenges, and to repay the €700 million of outstanding contingent convertible securities purchased by the government in 2012.

Moody's also affirmed BCP's long-term deposit and senior debt ratings at B1, with a stable outlook, and long-term counterparty risk assessment at Ba2(cr). The short-term deposit ratings of Not Prime and short-term counterparty risk assessment of Not Prime(cr) were unaffected by the ratings action.