Caixa Geral off Moody’s ‘junk’ list

 In Banks, News, Ratings agencies

Portugal’s public bank Caixa Geral de Depósitos has finally been removed from rating agency Moody’s ‘junk’ list.

It means that following a long and difficult restructuring process led by the bank’s president, Paulo Macedo, the bank has returned to investment status for the first time in 10 years.
It also means that the government and banking sector will have renewed confidence in Macedo’s leadership and his mandate will be renewed for a further four year term.
Moody’s has raised the bank’s rating for senior long term debt from ´Ba1’ to ‘Baa3’ which takes it out of the speculative investment or high investment risk band which is ‘C’ or below.
The bank’s outlook remains ‘stable’. In a communiqué, Caixa referred to the decision as an “important step” in the bank’s strategy to position itself in the market and has occurred after the ratings agency had increased the bank’s rating three times throughout the time its strategic plan was being implemented between 2017 and 2020, and is the “result of strengthening the solidity, profitability and quality of its assets.”
In April 2011, when Portugal requested international financial help, Caixa had an ‘A1’ rating at Moody’s. By the end of that same month it nose-dived to ‘Baa1’ before tanking to ‘Ba1’ within three months. Between 2011 and 2015 Caixa’s rating fell a further three positions into ‘junk’ status.
In February 2017 the bank registered its first rise in the ratings during the bank’s recapitalisation process.
Today, with this latest ratings increase, it has entered “positive terrain” as an investment grade bank according to two of the four ratings agencies, the other being DBRS. It remains to be seen if Fitch and Standard & Poor’s will follow suit.
Moody’s also upped the rating of the Banco BPI and its regular long-term senior unsecured debt from ‘Baa3’ to ‘Baa2’ with a Stable outlook and that of the bank Montepio to ‘B3’.