Moody's cuts ratings of six Canadian lenders
By Cameron French
(Reuters) - Moody's Investors Service has cut the ratings of six Canadian financial institutions, including the previously "Aaa" rated Toronto-Dominion Bank, due to concerns about rising consumer debt and high housing prices.
TD, the only publicly traded bank that still carried Moody's top rating, was downgraded, along with Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Bank of Montreal, National Bank of Canada and Caisse Central Desjardins, Canada's largest association of credit unions, Moody's said on Monday.
The cuts, which were widely anticipated after Moody's put the lenders on credit watch in October, were all by one notch.
Ratings downgrades typically lift the cost of borrowing for the affected financial institution.
However, investors did not seem perturbed by the action, as shares of all five TSX-listed banks rose on Monday, led by Scotiabank, which climbed 0.8 percent to C$58.95.
"I'm not surprised to see that there wasn't a lot of market movement, I think it's already been reflected in the market," said Tom Lewandowski, a St. Louise-based analyst at Edward Jones.
"In my opinion, it's jut an additional acknowledgement of the risks that are out there."
The only major Canadian bank not included in the cut was top player Royal Bank of Canada. That was because Moody's cut RBC's ratings by two notches last June as part of a review of 17 global banks. Continued...