Moody’s Fading Relevance Exposed in Nordic Downgrades
By Adam Ewing - May 29, 2012 7:43 AM ET
The response to the Moody’s Investors Service downgrade of the biggest Nordic banks was rising bond and share prices.
The reaction is the latest sign that investors are paying less attention to the views of rating companies and relying more on their own analysis to determine whether to buy or sell.
“We can see for ourselves just how strong the Swedish banks are so we don’t place much weight on what rating agencies tell us,” Nicklas Granath, a partner at Stockholm-based asset manager Norron AB, who helps manage about $200 million, said in an interview. “More and more the market is likely to take the same approach.”
As European policy makers try to reduce the dominance of rating companies in financial markets, investors are showing greater willingness to ignore Moody’s, Standard & Poor’s and Fitch Ratings. Denmark, which holds the European Union presidency, said this month it won backing in the 27-member bloc to curtail the influence of the raters. Danish banks have started firing Moody’s, while Swedbank AB (SWEDA), one of Sweden’s four biggest lenders, has said the views published by rating companies are “backward looking.”
Moody’s last week lowered Sweden’s Nordea Bank AB (NDA) and Svenska Handelsbanken AB (SHBA) to Aa3, and Norway’s DNB Bank ASA to A1, all single-level downgrades. Credit grades of SEB AB (SEBA) and Swedbank AB were affirmed while Landshypotek AB was cut two steps to Baa2. All ratings carry stable outlooks, Moody’s said.
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