Moody’s cut the credit rating of four of the biggest banks
We were interested by the overnight news that Australia’s four biggest banks have had their long-term credit rating downgraded. Downgraded rating = higher funding costs = higher mortgage rates = mortgage stress?
Bloomberg writes: “Moody’s Investors Service cut the long-term credit rating of Australia’s four biggest banks, saying surging home prices, rising household debt and sluggish wage growth pose a threat to the lenders.
Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, National Australia Bank Ltd. And Westpac Banking Corp. were all downgraded to Aa3 from Aa2, Moody’s said in a statement released Monday. The ratings outlook for all four lenders is stable, Moody’s said.”
Moody’s noted that the banks were taking steps to strengthen their balance sheets but “the very high level of household sector indebtedness will take a considerable period of time to unwind.”
If you would like to read more please find an article written by The Sydney Morning Herald here.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
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