Moody's cuts Handelsbanken, SEB, Swedbank hybrids

Moody's Investors Service said it affirmed the long-term deposit and senior unsecured debt ratings and maintained the stable outlooks on Svenska Handelsbanken AB, SEB and Swedbank AB.

At the same time, the agency downgraded the foreign currency high-trigger additional tier 1 ratings of Handelsbanken to Baa3(hyb) from Baa2(hyb), and those of SEB and Swedbank to Ba1(hyb) from Baa3(hyb).

Moody’s said the downgrade of the high-trigger AT1 securities follows the Swedish FSA's decision to move the 25% risk-weight floor for Swedish mortgages to pillar I from pillar II.

“Although nominal capital requirements will remain unchanged, this will lower capital metrics, including CET1, thereby reducing the distance between the banks' future CET1 ratios and the 8% threshold, a breach of which would trigger a full or partial write-down or equity conversion,” the agency said in a news release.

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