Deutsche Bank, Commerzbank Upgraded by S&P on German Law Change

Deutsche Bank AG and Commerzbank AG were both upgraded by S&P Ratings, which said a retroactive change to German law will make it safer for senior creditors in the nation’s largest banks.

Deutsche Bank, the nation’s largest lender, was raised one notch to A- from BBB+, as was Commerzbank, according to a statement late Tuesday from S&P. The ratings company also upgraded UniCredit SpA’s German arm and Deutsche Pfandbriefbank AG.

S&P said a law passed Jan. 1 “retroactively turned certain long-term standard senior unsecured bonds into subordinated instruments in a resolution and liquidation.” The changes significantly improved buffers protecting senior creditors, based on the rating company’s understanding of guidelines from BaFin, the German regulator, S&P said.

While the overall ratings of the firms were upgraded, S&P downgraded 333 of the four banks’ bonds that were reclassified as senior subordinated debt. It raised or affirmed the ratings on 91 issuances that will keep being treated as senior unsecured debt.

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