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In a rating issued on 7 December, the credit agency affirmed BCEE’s baseline credit assessment of A2 and its long-term and short-term counter party risk ratings of Aa1 and Prime-1, respectively, and long-term and short-term counterparty risk assessment of Aa1 (cr) and Prime-1 (cr), respectively. It also affirmed the bank’s subordinated debt rating of A3.

The subsequent report credited BCEE’s risk profile as being driven by its focus on retail and commercial banking activities and a resilient economy.

It wrote, however, that the bank was sensitive to a severe contraction in the Luxembourg real estate market.

Moody’s wrote:

“Despite an acceleration of mortgage loan origination in Luxembourg and rising house prices over the years, Moody’s considers that the risk of a downturn is still remote owing to its forecast of strong economic growth (3.7% in 2018 and 3% in 2019-2020).