We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Moody’s Investors Service, the ratings service arm of Moody's Corporation (MCO - Free Report) has lowered the long-term debt and deposit ratings of six Canadian banks by a level, according to a Bloomberg report. This is because the rating agency believes that lenders are nowadays more vulnerable to losses amid increasing household debt and runaway housing prices.
Except for Toronto-Dominion, Moody’s has also cut its counterparty risk assessment for the remaining five firms.
As a result of the downgrade, Toronto-Dominion now has a long-term debt rating of Aa2 while the other five banks have a debt rating of A1. The outlook for all the six banks is negative.
Moody’s senior vice president, David Beattie, said in the statement: “Expanding levels of private-sector debt could weaken asset quality in the future.”
He added, “Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.”
Recently, a deposit related issue at alternative mortgage lender Home Capital Group Inc. created concern over a broader slowdown in the nation’s real estate market. It comes as a major concern as Canadians have recently started taking on higher levels of household debt.
Moody’s said, “We do note that the Canadian banks maintain strong buffers in terms of capital and liquidity, however, the resilience of household balance sheets, and consequently bank portfolios, to a serious economic downturn has not been tested at these levels of private sector indebtedness.”
Moody’s also said in its statement that housing prices have been increasing despite efforts by policy makers. It noted that private-sector debt amounted to nearly 185% of Canada’s gross domestic product in 2016.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Moody's Lowers Debt Ratings of Six Canadian Banks
Moody’s Investors Service, the ratings service arm of Moody's Corporation (MCO - Free Report) has lowered the long-term debt and deposit ratings of six Canadian banks by a level, according to a Bloomberg report. This is because the rating agency believes that lenders are nowadays more vulnerable to losses amid increasing household debt and runaway housing prices.
The affected banks are The Toronto-Dominion Bank (TD - Free Report) , Bank of Montreal (BMO - Free Report) , The Bank of Nova Scotia (BNS - Free Report) , Canadian Imperial Bank of Commerce (CM - Free Report) , National Bank of Canada (NTIOF - Free Report) and Royal Bank of Canada (RY - Free Report) .
Except for Toronto-Dominion, Moody’s has also cut its counterparty risk assessment for the remaining five firms.
As a result of the downgrade, Toronto-Dominion now has a long-term debt rating of Aa2 while the other five banks have a debt rating of A1. The outlook for all the six banks is negative.
Moody’s senior vice president, David Beattie, said in the statement: “Expanding levels of private-sector debt could weaken asset quality in the future.”
He added, “Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.”
Recently, a deposit related issue at alternative mortgage lender Home Capital Group Inc. created concern over a broader slowdown in the nation’s real estate market. It comes as a major concern as Canadians have recently started taking on higher levels of household debt.
Moody’s said, “We do note that the Canadian banks maintain strong buffers in terms of capital and liquidity, however, the resilience of household balance sheets, and consequently bank portfolios, to a serious economic downturn has not been tested at these levels of private sector indebtedness.”
Moody’s also said in its statement that housing prices have been increasing despite efforts by policy makers. It noted that private-sector debt amounted to nearly 185% of Canada’s gross domestic product in 2016.
Of the banks mentioned above, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>