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Banks on Notice - S&P Cuts Credit Rating Outlook for Smaller Banks
Topic Started: 1 Nov 2016, 09:48 AM (1,398 Views)
jrsnr
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Rare find in the media i.e. report of negative outcomes in housing market

I wonder how the rating agencies are finding LMI insurers - i think that the insurers may be a truer bellwether of market conditions as they would represent those most sensitive in the market - e.g. those with either most recent loans and/or higher LVR's

S&P cuts credit rating outlook for raft of smaller banks due to housing market worries

Quote:
 
By business reporter Michael Janda
Updated yesterday at 3:49pm (posted to forum at 01-Nov-2016 09:50)

Australia's banking sector is at risk of a mass credit rating downgrade as Standard & Poor's warns surging debt and home prices are creating potential economic imbalances.

<snip>

Key points:
- 25 Australian financial institutions put on negative ratings outlook
- "Risks of a sharp correction in property prices could increase": S&P
- A sharp drop in Sydney or Melbourne home prices "could precipitate a crash in the rest of the country"
- S&P has put 25 Australian financial institutions on a negative credit outlook, largely due to growing risks from the housing sector.
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Rufus
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I doubt that investors will care much.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Terry
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Rufus
1 Nov 2016, 10:32 AM
I doubt that investors will care much.
I agree. The investors aren't being "downgraded". That's what they'll likely be thinking.
Edited by Terry, 1 Nov 2016, 11:41 AM.
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jrsnr
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Rufus
1 Nov 2016, 10:32 AM
I doubt that investors will care much.
i assume these investors you refer to are the ones buying real estate direct?

i doubt these investors will be either interested or concerned with a credit rating agency, a lot of mom and pops probably have never heard of a credit rating agency, they will only be concerned when interest rates rise such that it affects their bottom line e.g. cash flow

what about other investors? e.g. equity investor in companies affected - how might rating changes affect share price? e.g. bond investors?

haven't banks been complaining about low interest rate environment affecting Net Interest Margin - i.e. they have to increase volume of sales to cover lower margins

also credit ratings probably correlated in some respect to capital adequacy - capital adquecy requirements e.g. Basel has been bit of weight on companies over last few years and doesn't look like letting up if my memory serves me well

obviously change in credit outlook is very minor item in the scheme of things - but importance is more direction of rating changes - i.e. is this a change in overall direction?
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Rufus
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jrsnr
1 Nov 2016, 12:02 PM
i assume these investors you refer to are the ones buying real estate direct?

i doubt these investors will be either interested or concerned with a credit rating agency, a lot of mom and pops probably have never heard of a credit rating agency, they will only be concerned when interest rates rise such that it affects their bottom line e.g. cash flow

what about other investors? e.g. equity investor in companies affected - how might rating changes affect share price? e.g. bond investors?

haven't banks been complaining about low interest rate environment affecting Net Interest Margin - i.e. they have to increase volume of sales to cover lower margins

also credit ratings probably correlated in some respect to capital adequacy - capital adquecy requirements e.g. Basel has been bit of weight on companies over last few years and doesn't look like letting up if my memory serves me well

obviously change in credit outlook is very minor item in the scheme of things - but importance is more direction of rating changes - i.e. is this a change in overall direction?
I meant the investors who buy the bonds and RMBS.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Blondie girl
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We are living in awkward times where interest rates have never been soooo low.

Like the average FED's rate is like something 5.85% in the last forty odd yrs and early in October it was 0.5%, when it goes up some bonds do the downer.

So Bond yields are very low.

The trade value of a bond can increase or decrease with the variation of the IR.

jrsnr
1 Nov 2016, 12:02 PM
i assume these investors you refer to are the ones buying real estate direct?

i doubt these investors will be either interested or concerned with a credit rating agency, a lot of mom and pops probably have never heard of a credit rating agency, they will only be concerned when interest rates rise such that it affects their bottom line e.g. cash flow

what about other investors? e.g. equity investor in companies affected - how might rating changes affect share price? e.g. bond investors?

haven't banks been complaining about low interest rate environment affecting Net Interest Margin - i.e. they have to increase volume of sales to cover lower margins

also credit ratings probably correlated in some respect to capital adequacy - capital adquecy requirements e.g. Basel has been bit of weight on companies over last few years and doesn't look like letting up if my memory serves me well

obviously change in credit outlook is very minor item in the scheme of things - but importance is more direction of rating changes - i.e. is this a change in overall direction?
Vanguard EUR Corporate UCITS ETF.

heavily weighted towards A and BBB rated stuff....
Edited by Blondie girl, 1 Nov 2016, 05:57 PM.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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Jon Snow
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Blondie girl
1 Nov 2016, 05:50 PM
Vanguard EUR Corporate UCITS ETF.

heavily weighted towards A and BBB rated stuff....
Letting the facade slip?
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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Blondie girl
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Jon Snow
1 Nov 2016, 08:50 PM
Letting the facade slip?
Please explain?

Vanguard EUR Corporate Bond UCITS ETF, I have some in my portfolio stash.. I like Swissquote very very muchly.

I like monthly dividends (risk mitigation) and if there is income sources and expenses in EUR one shouldn't wet their pants about currency risk.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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Foxy
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Zero is coming...

Blondie girl
1 Nov 2016, 05:50 PM
We are living in awkward times where interest rates have never been soooo low.

Like the average FED's rate is like something 5.85% in the last forty odd yrs and early in October it was 0.5%, when it goes up some bonds do the downer.

So Bond yields are very low.

The trade value of a bond can increase or decrease with the variation of the IR.


Vanguard EUR Corporate UCITS ETF.

heavily weighted towards A and BBB rated stuff....
Hi Blondie,
I need to know how the rental market is right now.

Please update us.

Thanks

Peter
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Jon Snow
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Blondie girl
1 Nov 2016, 10:46 PM
Please explain?

Vanguard EUR Corporate Bond UCITS ETF, I have some in my portfolio stash.. I like Swissquote very very muchly.

I like monthly dividends (risk mitigation) and if there is income sources and expenses in EUR one shouldn't wet their pants about currency risk.
I'm talking about your dumb, drunk, Blonde act. You have a lot of peeps fooled.
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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