DB - Deutsche Bank credit rating raised at Moody's on prospects for lending returns

Moody's Investors Service upgraded Deutsche Bank's ( NYSE: DB ) long-term ratings by a notch to A1 from A2 on Wednesday and revised its outlook on long-term deposit and senior debt ratings to stable from positive, due to the German lender's progress in meeting its medium-term targets.

A1 is the fifth highest investment grade credit rating at Moody's, with Aaa being the highest and Baa3 being the lowest investment grade rating. Deutsche Bank ( DB ) shares rose 1.6% in Wednesday morning trading in the U.S.

"Moody's expects that DB's meaningfully reduced expense base should allow the bank to safeguard operating leverage in times of temporarily higher inflation and, thereby, defend its regained earnings strength," it said.

In addition, rising interest rates have improved Deutsche Bank's ( DB ) prospects for higher returns from it core lending businesses.

The company's junior senior unsecured debt ratings are raised to Baa1 from Baa2 and its baseline credit assessment to baa2 from baa3. Short-term ratings were affirmed at P-1, the highest rating for short-term debt.

Baa3 is the third lowest investment-grade rating. BCA rating in the baa range reflects medium-grade intrinsic or standalone financial strength and is subject to moderate credit risk and may possess certain speculative credit elements.

Last month, Deutsche Bank ( DB ) stock gained after its CFO said the bank is on track to reach the top of its revenue guidance this year.

See why SA contributor Anna Sokolidou sees the stock as undervalued.

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