HVB downgrade forces spreads wider

S&P downgraded HVB's long-term debt ratings to A- from A, and its short-term ratings to A-2 from A-1, with negative outlook. The agency was concerned that a prolonged economic downturn could further weaken HVB’s business and risk profile, particularly through increased credit risk and depressed revenues.

Debt protection costs on another German bank, Commerzbank, widened from 110/130bp on Tuesday to 110/145bp today. Yesterday, S&P affirmed its A- counterparty credit rating on Commerzbank with a

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