moodys down grade canadian banks to negative | General financial discussion | Discussion forum

The Moody's Canada press release is at Moody's expects lower predictability of government support for Canadian banks; changes banking system outlook to negative.

It's just the outlook of the banks that has been downgraded from stable to negative. No change in the ratings themselves.

Only the outlook of the ratings has changed from stable to negative. No change in the ratings themselves as of yet. The banks still have their Aa ratings since their last downgrade in January 2013:

Bank of Montreal: Aa3
Bank of Nova Scotia: Aa2
Canadian Imperial Bank of Commerce: Aa3
National Bank of Canada: Aa3
Toronto-Dominion Bank: Aa1

Downgrade may sound horrible. But, last time, Bank of Montreal was downgraded from Aa2 to Aa3. Hardly a disaster.

This is from page 34 of Moody's Rating Symbols and Definitions about rating outlooks:

Rating Outlooks

A Moody’s rating outlook is an opinion regarding the likely rating direction over the medium term. Rating outlooks fall into four categories: Positive (POS), Negative (NEG), Stable (STA), and Developing (DEV).
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A stable outlook indicates a low likelihood of a rating change over the medium term. A negative, positive or developing outlook indicates a higher likelihood of a rating change over the medium term. A rating committee that assigns an outlook of stable, negative, positive, or developing to an issuer’s rating is also indicating its belief that the issuer’s credit profile is consistent with the relevant rating level at that point in time.

The time between the assignment of a new rating outlook and a subsequent rating action has historically varied widely, depending upon the pace of new credit developments which materially affect the issuer’s credit profile. On average, after the initial assignment of a positive or negative rating outlook, the next rating action – either a change in outlook, a rating review, or a change in rating – has followed within about a year, but outlooks have also remained in place for much shorter and much longer periods of time. The next rating action subsequent to the assignment of a negative (positive) rating outlook has historically been a downgrade or review for possible downgrade (upgrade or review for possible upgrade) about one half of the time; rating actions in the opposite direction are less common. After the initial assignment of a stable outlook, about 90% of ratings experience no change in rating during the following year.