Morningstar DBRS ups Montepio senior bond rating to investment grade

The Canadian ratings agency Morningstar DBRS has increased the long term rating on Banco Montepio’s non-guaranteed senior bonds to BBB (low), taking them from ‘junk’ status to investment grade.

In banking, “senior debt” refers to a type of debt, held in bonds, that holds the highest priority in repayment compared to other debt obligations in a company’s capital structure. Essentially, if a company defaults or goes into liquidation, senior debt holders are first in line to receive payment from the company’s asset

“The financial rating agency DBRS Ratings GmbH (Morningstar DBRS) has raised the Long-Term Issuer Rating and the Long-Term Senior Debt to ‘BBB (low)’, thereby becoming investment grade”, states a note sent to the Portuguese securities market regulator, CMVM.

Moreover, DBRS also raised the long-term rating for deposits to BBB and subordinated debt to BB “changing the outlook for the bank to “stable” across all ratings.

This was the fourth consecutive increase in Montepio’s ratings from DBRS since March 2023, across a total of five levels.

The ratings agency said that the increased rating was “supported by an improvement in the bank’s risk profile, capitalisation, and profitability”.

DBRS (now known as Morningstar DBRS) is a Canadian ratings agency. It is headquartered in Toronto and is a major credit rating agency, often considered the fourth-largest globally after the Big Three (Moody’s, S&P, and Fitch). DBRS is also a designated rating organization under Canadian securities law.