We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Moody's Upgrades Credit Suisse and Affirms UBS Group Ratings
Read MoreHide Full Article
Moody's Investors Service has upgraded the senior unsecured debt ratings of Credit Suisse Group AG to Baa1 from Baa2. Further, the rating agency has affirmed the long-term deposit ratings, long-term issuer and senior unsecured debt ratings of UBS Group AG (UBS - Free Report) at Aa2, Aa3 and A3 respectively.
Moody’s upgraded Credit Suisse's Baseline Credit Assessment (BCA) to baa1 from baa2, its Adjusted BCA to baa1 from baa2, and its long-term Counterparty Risk (CR) Assessment to Aa3(cr) from A1(cr). Further, the senior unsecured debt, long-term issuer as well as long-term deposit ratings of all of its subsidiaries have been upgraded. The rating agency has affirmed all of the company's and its subsidiaries' Prime-1 short-term ratings.
The rating agency also affirmed UBS Group's BCA at a3, and Adjusted BCA and its Aa2(cr) long-term CR Assessment as well as all of its other long- and short-term ratings. Similarly, the senior unsecured debt, issuer, as well as deposit ratings of all of its subsidiaries have been affirmed. Moody’s further affirmed UBS Group's A3 senior unsecured debt ratings and Ba1(hyb) preferred stock ratings.
Notably, the ratings outlook is stable for both companies.
Reasons Behind Ratings Upgrade of Credit Suisse
The rating agency noted that Credit Suisse has stable profitability driven by its low-cost base, aided by lower funding costs and revenue growth in the company’s primary businesses. Further, the company's stable global wealth management and Swiss banking businesses support earning capability and reduce risk.
Also, the bank’s restructuring process has been positively viewed by Moody’s. The restructuring process has resulted in a significant reduction in balance-sheet risk, and rise in returns and operating leverage of other businesses. In addition, adequate liquidity and funding profile, coupled with an above- average maturity profile of its debt, gives it a strong footing.
Moreover, Moody’s maintains its assumption that the probability of government support for creditors of Credit Suisse remains low. Also, the rating agency is of the opinion that there is only a moderate chance of government support for junior depositors and bank-level senior unsecured creditors at Credit Suisse in case of failure.
Though the rating agency has taken into account the inherent volatility and opaque nature of the company's capital markets business, its robust capital position will keep the credit profile secure.
Reasons for Affirmation of UBS Group
The rating agency found UBS Group's capital and liquidity position to be solid. Additionally, the company’s pro-active risk management measures and stability of earnings in global wealth management and Swiss banking businesses support the ratings.
The rating agency remarked that UBS Group's wealth management business is the most diverse among its peers, with solid presence in both the Asian and the U.S. markets. The company's earnings stability can be gauged from the fact that its wealth management business generated more than 50% of the total revenues and about 60% of total pre-tax profits over the past few years. Apart from this, the company has been able to mitigate the pandemic-induced economic uncertainties as well as navigate the resultant low rate environment to a large extent, reflecting its credit strength.
Moreover, Moody’s maintains its assumption that the probability of government support for creditors of UBS Group is low. The rating agency is also of the opinion that there is only a slight chance of government support for junior depositors and bank-level senior unsecured creditors at UBS Group in case of failure.
Though the rating agency has taken into account the inherent volatility and opaque nature of the bank's capital markets business, it is still a concern. Further, its various litigation proceedings remain a headwind.
Price Performance & Zacks Rank
In the past six months, shares of Credit Suisse and UBS Group have appreciated 26.7% and 25%, respectively, outperforming the 20.5% rally of the industry.
Amid the pandemic and the resultant uncertainties, Moody’s affirmed the ratings for some other foreign banks as well. In November, the rating agency affirmed ratings for Deutsche Bank AG (DB - Free Report) and Barclays PLC (BCS - Free Report) .
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
Moody's Upgrades Credit Suisse and Affirms UBS Group Ratings
Moody's Investors Service has upgraded the senior unsecured debt ratings of Credit Suisse Group AG to Baa1 from Baa2. Further, the rating agency has affirmed the long-term deposit ratings, long-term issuer and senior unsecured debt ratings of UBS Group AG (UBS - Free Report) at Aa2, Aa3 and A3 respectively.
Moody’s upgraded Credit Suisse's Baseline Credit Assessment (BCA) to baa1 from baa2, its Adjusted BCA to baa1 from baa2, and its long-term Counterparty Risk (CR) Assessment to Aa3(cr) from A1(cr). Further, the senior unsecured debt, long-term issuer as well as long-term deposit ratings of all of its subsidiaries have been upgraded. The rating agency has affirmed all of the company's and its subsidiaries' Prime-1 short-term ratings.
The rating agency also affirmed UBS Group's BCA at a3, and Adjusted BCA and its Aa2(cr) long-term CR Assessment as well as all of its other long- and short-term ratings. Similarly, the senior unsecured debt, issuer, as well as deposit ratings of all of its subsidiaries have been affirmed. Moody’s further affirmed UBS Group's A3 senior unsecured debt ratings and Ba1(hyb) preferred stock ratings.
Notably, the ratings outlook is stable for both companies.
Reasons Behind Ratings Upgrade of Credit Suisse
The rating agency noted that Credit Suisse has stable profitability driven by its low-cost base, aided by lower funding costs and revenue growth in the company’s primary businesses. Further, the company's stable global wealth management and Swiss banking businesses support earning capability and reduce risk.
Also, the bank’s restructuring process has been positively viewed by Moody’s. The restructuring process has resulted in a significant reduction in balance-sheet risk, and rise in returns and operating leverage of other businesses. In addition, adequate liquidity and funding profile, coupled with an above- average maturity profile of its debt, gives it a strong footing.
Moreover, Moody’s maintains its assumption that the probability of government support for creditors of Credit Suisse remains low. Also, the rating agency is of the opinion that there is only a moderate chance of government support for junior depositors and bank-level senior unsecured creditors at Credit Suisse in case of failure.
Though the rating agency has taken into account the inherent volatility and opaque nature of the company's capital markets business, its robust capital position will keep the credit profile secure.
Reasons for Affirmation of UBS Group
The rating agency found UBS Group's capital and liquidity position to be solid. Additionally, the company’s pro-active risk management measures and stability of earnings in global wealth management and Swiss banking businesses support the ratings.
The rating agency remarked that UBS Group's wealth management business is the most diverse among its peers, with solid presence in both the Asian and the U.S. markets. The company's earnings stability can be gauged from the fact that its wealth management business generated more than 50% of the total revenues and about 60% of total pre-tax profits over the past few years. Apart from this, the company has been able to mitigate the pandemic-induced economic uncertainties as well as navigate the resultant low rate environment to a large extent, reflecting its credit strength.
Moreover, Moody’s maintains its assumption that the probability of government support for creditors of UBS Group is low. The rating agency is also of the opinion that there is only a slight chance of government support for junior depositors and bank-level senior unsecured creditors at UBS Group in case of failure.
Though the rating agency has taken into account the inherent volatility and opaque nature of the bank's capital markets business, it is still a concern. Further, its various litigation proceedings remain a headwind.
Price Performance & Zacks Rank
In the past six months, shares of Credit Suisse and UBS Group have appreciated 26.7% and 25%, respectively, outperforming the 20.5% rally of the industry.
Currently, UBS Group carries a Zacks Rank #2 (Buy), while Credit Suisse has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Similar Rating Actions on Other Foreign Banks
Amid the pandemic and the resultant uncertainties, Moody’s affirmed the ratings for some other foreign banks as well. In November, the rating agency affirmed ratings for Deutsche Bank AG (DB - Free Report) and Barclays PLC (BCS - Free Report) .
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>