The Austrian government’s recent decision to overturn the guarantee provided by the State of Carinthia to holders of Hype Alpe Adria’s subordinated debt has come back to haunt it. Citing reduced government support, inadequate capital and poor performance, the ratings agency Moody's has downgraded Oesterreichische Volksbanken AG (VBAG) and its senior debt to Ba3 with a negative outlook.
This downgrade follows on from Moody’s recent announcement that the Austrian government’s decision with regard to HAA would be “credit negative” for the Austrian banking system and possibly also for the sovereign....But this downgrade has much wider implications. Read the whole article here.
(photo credit: Financial Times)