The major Australian banks - and investors - have shrugged off a downgrade from credit ratings agency Moody's.
The share prices of ANZ (ASX:ANZ), Commonwealth Bank (ASX:CBA), NAB (ASX:NAB) and Westpac (ASX:WBC) all rose in Thursday's trading despite Moody's decision the day before to lower the major banks' long-term senior unsecured credit rating to Aa2 from Aa1.
CBA shares grew 1.12% in Tuesday's trading to $52.380, ANZ shares grew 1.28% to $22.980, WBC was up 0.39% to $22.900 and NAB 1.75% to $27.400.
Only Commonwealth Bank and Westpac closed lower the day before – CBA shares by 0.17% and WBC by just 0.09%.
In separate statements to the market, Westpac pointed out that it remains one of the few banks worldwide in the Aa category, and NAB said its short term ratings had been left unchanged.
Commonwealth Bank, which also had its Bank Financial Strength Rating lowered to B- from B, said it had diversified its investor base, increased its stable funding and reduced its reliance on short term wholesale funding.
“We believe this places us in a strong position from a funding perspective in the future,” CBA group treasurer Lyn Cobley said.
ANZ said the Aa2 rating is still one notch higher than its Aa3 rating prior to May 2007, and that Moody's had confirmed its P-1 grade – the highest given – for ANZ's short term debt rating.
Moody's cited the Australian financial sector's banks' continuing long-term reliance on offshore debt, and the resultant increased sensitivity to conditions in wholesale funding markets, as a reason for the downgrade.
The decision follows a review of Australian banks' ratings for a possible downgrade that began in February.
The Aa2 rating of the banks' New Zealand subsidiaries are also under a similar review.