Moody's downgrades some hybrid securities

Moody's Investors Service said it confirmed its ratings on NIBC Bank NV's hybrid securities at Ba1 and downgraded its ratings on some Swedish and Danish hybrid securities, including:

• Nordea Bank AB's noncumulative tier 1 securities to Baa2 from A1 and its junior subordinated debt and junior subordinated euro medium-term note program ratings (upper tier 2) to A3 from Aa3;

• Svenska Handelsbanken AB's noncumulative tier 1 securities to Baa2 from A1 and its junior subordinated debt and junior subordinated euro medium-term note program ratings (upper tier 2) to A3 from Aa3;

• Swedbank AB's noncumulative tier 1 securities to Ba3 from Ba1 and its junior subordinated debt and junior subordinated euro medium-term note program ratings (upper tier 2) to Ba1 from Baa2;

• Danske Bank A/S' noncumulative tier 1 securities to Baa3 from Baa1 and its junior subordinated debt and junior subordinated euro medium-term note program ratings (upper tier 2) to Baa2 from A3.

The rating actions were made in line with the revision of Moody's guidelines for rating bank hybrids and subordinated debt in November. This concludes the review for possible downgrade begun on Nov. 18, and the outlook for the banks is negative.

Prior to the global financial crisis, the agency had incorporated into its ratings an assumption that support provided by national governments and central banks to shore up a troubled bank would, to some extent, benefit the subordinated debt holders as well as the senior creditors. Moody's said that contrary to this expectation - and the past behavior of most governments - the systemic support for these instruments has not been forthcoming in many cases during this crisis. The revised guidelines largely remove previous assumptions of systemic support, resulting in the rating action.

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