Moody's backtracks on ratings

The improved credit ratings handed out - amid controversy - by Moody's Investors Service to a range of Australian banks in May 2007 are now under review.

One of the controversial credit ratings - in the Aa category for Suncorp - has simply been pushed back closer to its starting point as a single A rated bank.

Moody's yesterday said it would review the Aa1 ratings of ANZ, Commonwealth and Westpac. The agency cut its rating of Suncorp from Aa3 to A1.

Two years ago Moody's pushed ahead with a long running review of its ratings methodology, which covered the financial strength ratings for individual banks and the systemic support for financial institutions by regulators and government.

Moody's at the time upgraded its ratings for ANZ, Commonwealth, National and Westpac to Aa1 from Aa3. All these ratings are now under review. (Moody's announced the review of NAB last year).

In 2007 Moody's lifted Suncorp to Aa3 from A2. Yesterday's downgrade leaves Suncorp with a higher credit rating than before the Moody's review of its ratings approach.

The Moody's review is getting plenty of air - or a major beat up - in some other places today.

Whether right or wrong, the new Moody's rating on Suncorp is - and reduced Moody's rating on major banks may end up being - higher than they were two years ago, and still a fraction more favourable than the credit opinions of Standard & Poor's or Fitch Ratings.