Moody’s has lifted its rating on Royal Bank of Scotland Group (LON:RBS) to investment grade. The move is good news for the bailed-out lender which has been struggling to recover following its taxpayer-funded bailout during the financial crisis.
RBS’ share price has gained ground in London this morning, having added 0.72 percent to 253.30p as of 08:41 BST, slightly outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.26 percent higher at 7,438.68 points. The group’s shares have added more than 18 percent to their value over the past year, and are up by some 13 percent in the year-to-date.
Moody’s announced in a statement yesterday that it had upgraded RBS’ long-term senior unsecured debt ratings to Baa3, the lowest investment-grade level. The agency explained that the move reflected the group’s ‘improved standalone credit strength due to progress on restructuring’.
“While business remains vulnerable to shocks, including Brexit, RBSG’s capacity to absorb losses has increased and the rating agency expects that non-recurring charges should decrease over the next eighteen months,” Moody’s pointed out.
The upgrade marks a step forward in RBS’ recovery, with the lender continuing to struggle to return to profitability following its taxpayer-funded bailout. The FTSE 100 group further remains more than 70-percent owned by the UK government.
RBS welcomed the rating upgrade, with the company’s chief financial officer Ewen Stevenson commenting in a statement that “becoming investment grade rated for our long-term ratings across all three credit rating agencies has been an important goal for us”.
“It is further external validation that our turnaround is now well progressed,” he pointed out. RBS, however, still has to reach a settlement with the US Department of Justice over mis-sold mortgage-backed securities in the run-up to the financial crisis.