Hybrids down and banks not up

Author: | Published: 1 Dec 2009

Nicholas Pettifer
Americas editor

Rating agencies are beginning to remove systemic and regional support from the way they assess hybrid securities and subordinated debt. Alongside wider notching, this means likely downgrades.

During an IFLR and Morrison & Foerster web seminar last month, a representative from Moody's Investors Services explained the agency's revised methodology.

"In many cases we will be removing systemic and regional support," said Barbara Havlicek, senior vice president in the Hybrid Capital Group at Moody's. "We thought that systemic support would extend to hybrid rating through the crisis. This has not necessarily happened."

As a result, Moody's has placed 775 hybrid and subordinated debt securities on review for a possible downgrade. There are also 460 medium-term note and shelf registration programmes on review.

Wider notching This translates...