(Bloomberg) — Deutsche Bank AG’s improving capital position has prompted Fitch Ratings Inc. to upgrade its riskiest bonds.
Fitch lifted the notes, known as Additional Tier 1s, by one level to BB-, three steps below investment-grade. Risks for holders have reduced due to Deutsche Bank’s “improved capitalization”, according to a statement. The ratings agency also believes that the bank will maintain “a wide enough buffer” over key capital thresholds that enables it to make distributions, such as AT1 coupon payments.
Deutsche Bank reported a common equity Tier 1 (CET1) ratio of 13.3% at end of the second quarter, up from 12.8% in the first, helped by factors including repayments of revolving credit facilities and regulatory relief. Fitch had expected the ratio to decline. The bank’s total capital also improved due to Tier 2 issuance in May and July.
The bank’s 1.75 billion-euro ($2 billion) note, which may be called in April 2022, was quoted about 0.2 cents higher on the euro on Monday, in line with the broader sector. Still, the note’s price is at the highest for nearly a month, at about 93 cents on the euro. It hit a low of about 53 cents in March as the coronavirus crisis triggered a market-wide sell-off.
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