Moody's downgrades Australia's big four banks

 Moody's on Wednesday downgraded the debt ratings of Australia's big four banks to Aa2, citing their dependence on volatile global lending markets.

The move was well-flagged, with Moody's placing the banks on a negative ratings watch in February, and brings them in line with the other two major ratings agencies, Standard and Poor's and Fitch, analysts said.
The downgrade was from Aa1 and affects the country's big lenders -- Australia and New Zealand Banking Group Ltd, Commonwealth Bank of Australia, Westpac Banking Corp., and National Australia Bank Ltd.

"The downgrade reflects our view of the Australian banking system's structural sensitivity to conditions in wholesale funding markets," said Patrick Winsbury, senior vice president based in Moody's Sydney office.

"Australia's major banks have relatively high levels of wholesale funding and the global financial crisis has underlined the speed with which shifts in investor confidence can impact bank funding.

"While the major banks have reduced their sensitivity to disruptions in the wholesale funding markets, the Australian financial sector's long-term, underlying reliance on offshore debt remains in place," he added.

"Moody's believes this is better reflected at the Aa2 rating level."

Shares of all four banks declined after the decision but National Australian Bank and ANZ both bounced back to finish in the green, while Commonwealth and Westpac were only marginally in the red.