Raiffeisen Junior Bonds Fall After Moody’s Cuts Credit RatingJohn Glover and Boris Groendahl
Subordinated bonds of Raiffeisen Bank International AG dropped after Moody’s Investors Service downgraded the lender’s debt rating to two steps above junk.
The company’s 290 million euros ($330 million) of 5.875 percent junior bonds maturing in April 2023 led declines in the company’s lower-ranking securities, according to data compiled by Bloomberg. The notes fell as much as 11.9 cents on the euro to 82.2 cents, the biggest intraday drop since Jan. 27, the data show.
Moody’s cited risks the Vienna-based bank will struggle to free up enough capital by selling assets to counter losses. Raiffeisen, which gets most of its income from Russia and countries in eastern Europe, reported a net loss of 493 million euros for 2014, Bloomberg data show.
“RBI will continue to face significant capital and profit pressures in the years to come, given ongoing challenges in key markets, including Russia,” Moody’s analysts led by Swen Metzler in Frankfurt wrote in the ratings report on Wednesday.
Moody’s reduced Raiffeisen’s long-term debt rating by one level to Baa2, it’s second-lowest investment grade, and said in a report on Wednesday it’s considering reducing the grade further. The New York-based rating company cut the bank’s subordinated debt rating to Ba2, its second-highest junk grade.
“We expect the loan-to-deposit ratio to further improve and as a consequence the relevance of capital market sensitive funding to further reduce,” Raiffeisen spokeswoman Susanne Langer said in an e-mailed statement. “RBI’s rating is now in line with the ratings of the other major Austrian banks.”
Raiffeisen’s shares fell as much as 4.8 percent to 12.84 euros and were down 0.5 percent at 13 euros as of 1:33 p.m. in Vienna.