Could Australian banks retain ratings despite sovereign downgrade?

Nikko AM

Nikko AM

Nikko AM Australia’s fixed income team has analysed whether it is possible for the banks to maintain their AA- ratings without the uplift from a AAA sovereign rating. We explore how the Australian banks receive their AA- ratings, whether they could maintain those ratings despite a sovereign downgrade and the implications of a downgrade for their access to funding and for spread movements. In our view, although it is possible for the banks to improve their capital levels and maintain their AA- ratings even if Australia loses its AAA rating, it is probably not all that likely. However, we do not believe it likely that a S&P downgrade would, in itself, limit the banks’ issuance access to offshore markets. (VIEW LINK)


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Nikko Asset Management is one of Asia’s largest asset managers, providing high-conviction, active fund management across a range of Equity, Fixed Income, Multi-Asset and Alternative strategies. In April 2021, Yarra Capital Management acquired...

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