Moody’s investors service said Thursday it had changed to negative the outlooks of 17 German banking groups and several subsidiaries.
The decision affected their long-term debt and deposit ratings or their long-term guaranteed debt obligations, whose ratings incorporate support from the German government or several German federal states or municipalities.
Moody’s explained the update of outlooks was the consequence of German sovereign and sub-sovereign ratings having been graded to negative from stable July 23 and 24 by the agency.
The actions announced today in Moody’s words:
“The outlook on Kreditanstalt fuer Wiederaufbau’s (KfW) Aaa long-term senior debt and deposit ratings was changed to negative from stable, reflecting Moody’s assessment of the weakened credit profile of the Government of Germany, the guarantee provider of the bank. As a result, the rating agency also changed the outlook on the Aa3 long-term ratings of its subsidiary KfW Ipex to negative from stable.
“The outlook on several other government-related issuers have been changed to negative from stable to capture Moody’s change in the outlook for the creditworthiness of the respective owners.
“The outlook on EAA Covered Bond Bank plc’s (EAA CBB) Aa1 long-term deposit ratings was changed to negative from stable in line with the outlook for EAA CBB’s parent and guarantee provider Erste Abwicklungsanstalt (EAA) (Aa1, negative; P-1).”
During the financial crisis, the German government provided liquidity guarantees in 2008-10 to financial institutions that allowed them to issue bonds with maturities of up to five years, Moody’s added.
Moody’s rated four development banks in Germany as government-related issuers, and hence their ratings are aligned with their owner and support provider. This has had an impact on L-Bank (Aaa), Landwirtschaftliche Rentenbank (Aaa), LfA Foerderbank Bayern (Aaa) and NRW.BANK (Aa1).
Also Deutsche Siedlungs- und Landesrentenbank (DSL), merged into Deutsche Postbank AG (A2; D+ / ba1 stable) which is a majority owned subsidiary of Deutsche Bank AG (A2, C- / baa2 stable) has now been placed under negative outlook.