The Chinese agency Dagong improved Novo Banco's rating, but kept it in a speculative investment grade.
The Chinese rating agency Dagong improved Novo Banco’s rating, moving it from a high risk threshold to an improved level with a stable outlook, although it is still considered a speculative investment.
This decision is justified with the capital injections made by the North American fund Lone Star and the Resolution Fund, according to a note sent by Novo Banco to CMVM. Dagong considers that the bank headed by António Ramalho now has “a strong capital level”.
In that sense, the rating for Novo Banco’s long-term credit moved to a “B” with a “stable” outlook, from a “CCC”. As for the rating for Novo Banco’s short-term credit, it went from a “C” to a “B”. Dagong had not made a decision about Novo Banco’s rating since October of 2017.
“The rating action reflects the fact that Novo Banco is no longer a transition bank and that the capital injections made by Lone Star and the contribution by the Resolution Fund have allowed the Bank to maintain a strong capital level, despite recognizing large losses on NPL in 2017”, is stated in the note sent to CMVM.