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Moody's upgrades Hypo Vorarlberg Bank on improving financial fundamentals

Moody's on Feb. 7 upgraded Hypo Vorarlberg Bank AG's long-term local- and foreign-currency bank deposit, senior unsecured debt and issuer ratings to A3 from Baa1, with stable outlooks.

The rating agency also upgraded the Austrian lender's baseline and adjusted baseline credit assessments to "baa2" from "baa3" and its long- and short-term counterparty risk assessments to A2(cr)/P-1(cr) from A3(cr)/P-2(cr), and affirmed its P-2 short-term local- and foreign-currency bank deposit and issuer ratings.

Moody's said the upgrade of the bank's ratings reflects the improvement of its financial fundamentals following the capital measures agreed upon and partly implemented at the end of 2017, which will strengthen its ability to establish its risk-weighted core capital ratios sustainably above 13% going forward.

The upgrade incorporates the bank's reduced exposure to tail risks following the maturity of the largest part of the deficiency-guaranteed liabilities issued by Austria's Landeshypothekenbanks, including its joint issuance vehicle Pfandbriefbank (Österreich) AG, the agency noted.

Meanwhile, the upgrade of Hypo Vorarlberg Bank's baseline credit assessment reflects its sustainably improved capitalization and its lowered asset tail risks, with the "baa2" rating based on its success in better spreading out its maturity profile following the refinancing of its 2017 bond maturities as it maintains sufficient liquid resources, Moody's said.