Moody's downgrades OTP bond

Moody's Investors Service said it downgraded OTP Bank's upper tier 2 perpetual subordinated bond issue to Ba1 from Baa2.

This concludes the review for possible downgrade begun on Nov. 18. All other ratings of OTP Bank remain unchanged, and the outlook remains negative.

The agency said the rating action is in line with its revised guidelines for rating bank hybrids and subordinated debt. Prior to the global financial crisis, Moody's had incorporated into its ratings an assumption that support provided by national governments and central banks to shore up a troubled bank would, to some extent, benefit the subordinated debtholders as well as the senior creditors. However, the systemic support for these instruments has not been forthcoming in many cases, Moody's said.

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