Austrian Banks’ Ratings Cut by Moody’s on Planned Hypo Alpe Law

Austrian banks including Erste Group Bank AG and Raiffeisen Bank International AG had their debt ratings cut by Moody’s Investors Service as the government forced losses on state-guaranteed bonds this month.

Moody’s cut by one level the debt ratings of 11 banks including the country’s biggest, Erste Group Bank AG, and third-biggest, Raiffeisen Bank International AG. It also cut to junk level the debt of state-owned Kommunalkredit Austria AG. Moody’s cited “the unprecedented nature” of the Austrian government’s draft law voiding 890 million euros ($1.2 billion) of bonds at Hypo Alpe-Adria-Bank International AG that were guaranteed by the province of Carinthia.