Moody’s Investors Service has downgraded €24 billion ($32.8 billion) in subordinated debt securities at German banks as proposed legislation would increase the risk of losses among debt holders. BNP Paribas analysts stated in an investors’ note that the new legislation “materially reduces the likelihood of government support for [lower Tier 2] securities and therefore took out the state support uplift,” adding that the downgrades “are as harsh as we had expected, which may weigh on sentiment.” The downgrades effective a long list of German financial institutions, including Commerzbank, Deutsche Bank, Deutsche Postbank, WestLB and several state-owned landesbanks.
