Canadian Manufacturing

Moody’s smacks Canada’s big banks on debt risks

The debt-rating agency said Canadian consumer debt and elevated housing prices leaves consumers and the banks more vulnerable


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TORONTO—Moody’s Investors Service has downgraded the Canada’s six big banks as it raised concerns about growing consumer debt and housing prices.

The debt-rating agency says it expects TD Bank, Bank of Montreal, Scotiabank, CIBC, National Bank, and Royal Bank to face a more challenging operating environment for the remainder of this year and beyond.

Moody’s downgraded the baseline credit assessments, the long-term debt and deposit ratings and the counterparty risk assessments of the banks and their affiliates by one notch, with the exception of TD Bank’s counter party risk assessment which was affirmed.

It also maintained its negative outlook for the relevant ratings on the six banks.

Moody’s says the downgrade reflects its ongoing concerns that expanding levels of private-sector debt could weaken asset quality in the future.

It says growth in Canadian consumer debt and elevated housing prices leaves consumers and the banks more vulnerable to downside risks facing the Canadian economy than in the past.


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