S&P upgrades Aussie major bank Tier 2 bond ratings from BBB+ to A-
As first forecast here in November 2023...
Aussie major bank Tier 2 bonds were today upgraded from a BBB+ credit rating to A-, and Bendigo & Adelaide Bank and Bank of Queensland senior bonds upgraded from BBB+ to A-, which will massively expand the pool of global capital available to be allocated to these assets.
This is a result of Coolabah's unique late 2023 forecast regarding Standard & Poor's lifting Australia's Banking Industry Country Risk Assessment (BICRA) score from 3 to 2 coming to fruition (lower is better), with the market-leading credit agency today declaring:
- Continued strengthening of regulatory and governance standards in the Australian banking sector has reduced industrywide risks. Simplified business models and advances in risk management have also contributed to this improvement.
- We now assess the institutional framework for the banking industry in Australia at the lowest risk level on our scale, and in line with that in Canada, Hong Kong, and Singapore.
- Consequently, we raised our long-term issuer credit ratings on most of the non-major Australia-based banks and other financial institutions. - We have also upgraded all the rated Additional Tier 1 and Tier 2 instruments issued by Australian banks and their New Zealand banking subsidiaries.
Coolabah published this forecast on 23 November 2023 here at Livewire, predicting that S&P was likely to move around the first quarter of 2024. No other analysts globally shared the same view on this rating change at the time, although many did subsequently come to slowly embrace the idea.
Other interesting consequences that we forecast were an upgrade to the major bank's AT1 hybrid ratings from BBB- to BBB, which has also materialised.
Aussie major bank Tier 2 is now in the "A" band for the first time with all three key global credit rating agencies (CBA will shortly be confirmed for an upgrade with Moody's, based on our research).
Australia's banking system also has the lowest BICRA score globally alongside Canada, Singapore and Hong Kong, which is an entirely prudent determination.
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Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha Managers” based on his risk-adjusted performance throughout his career across. He previously worked for Goldman Sachs in London and Sydney, the Reserve Bank of Australia, and founded the award‐winning research/investment group, Rismark. He has regularly advised governments, developing unique policy proposals. Chris graduated with the University Medal (Economics & Finance) from Sydney University. He studied in the PhD program at Cambridge University in 2002/03, leaving to set up his funds business.
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Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...
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Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...
Expertise
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