Bank of Ireland wins ratings boost from Moody’s

Moody’s, one of the world’s largest debt ratings agencies, upgraded its stance on Bank of Ireland’s long-term creditworthiness, after the lender sold hundreds of millions of euro of bonds in the past 15 months that could be used to absorb losses in the event of a future crisis.

Bank of Ireland’s long-term rating has been raised by one level to A3, which still remains six rungs below its top-notch AAA grading.

The Dublin-based bank’s new holding company raised €750 million of “bail-in-able” junior bonds in September last year. It subsequently sold a total of almost €2 billion of such junior and senior notes under new European banking rules. This increases the level of protection for other senior bondholders and junior deposits, Moody’s said.

Bank of Ireland has a target to raise between €4 billion and €5 billion of "bail-in-able" bonds, or what are known as minimum requirement for own funds and eligible liabilities, by 2021.

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Positive

Moody’s maintained a “positive” outlook on Bank of Ireland’s ratings, in the expectation that they will be upgraded further as the bank continues to lower its level of problem loans, improves its profitability and maintains adequate capital reserve levels.

The ratings firm raised its outlook on Bank of Ireland (UK)’s ratings to “positive” from “stable”. The UK accounts for about 40 per cent of the group’s loan book, making it the most directly exposed Irish bank to Brexit.