Moody’s drops Kiwibank to A1

Moody's Investors Service said it downgraded Kiwibank Ltd.’s long-term issuer and deposit ratings to A1 from Aa3.

The agency also downgraded the bank's long-term counterparty risk assessment to Aa3(cr) from Aa2(cr) and its adjusted baseline credit assessment to baa2 from aa3.

The short-term issuer and deposit ratings were confirmed at P-1, along with the short-term counterparty risk assessment at P-1(cr).

The outlook is stable.

This action concludes the review initiated on April 7, 2016 and follows the Feb. 28 removal of the guarantee on Kiwibank's payment obligations that was provided by its parent, New Zealand Post.

The downgrade rating is a direct result of the removal of the New Zealand Post guarantee which Moody’s said it believes has introduced some uncertainty about the potential for parental support.

However, in the agency’s view, Kiwibank will continue to benefit from a very high likelihood of government support, given that it will remain indirectly owned by the government.

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