Norwegian Up- and Downgrades

A lot of more or less well-funded stock recommendations are flying around these days.  I’ve looked at which Norwegian companies the rating agencies are most (and least) comfortable with.

“Moody’s main concern in terms of credit quality relates to the corporate sector and, in particular, to some more volatile sectors such as those related to shipping and commercial real estate. Export industries could also be pressurised should the recent strengthening of the krone be sustained.

Moody’s Investor Service

(Article partly Norwegian/English, links to reports in English)

Mer eller mindre velbegrunnede aksjetips hagler om ørene på investorene i disse dager. Jeg har sett på hvilke norske selskaper som de internasjonale ratingbyråene er mest og minst komfortable med.

Det er ikke mange som har fått sin kredittverdighet oppgradert i 2009.

Faktisk finner vi bare ett norsk selskap som dekkes av ratingbyråene Standard & Poor’s, Moody’s og Fitch og som er kommet finansielt sterkere ut av året som gikk.

Det er Frontier Drilling som 22.juni i fjor fikk sine økonomiske utsikter oppgradert til “positive” av Moody’s Investor Services.

Frontier Drilling ble tatt av noteringslisten på Oslo Børs i 2004 etter en krangel med Delphi Fondsforvaltning og Børsklagenemda.


Den andre oppgraderingen vi finner er Oslo By.

Fem dager etter at president Barack Obama var i byen for å motta Nobels Fredspris ble de lokale myndighetene i Oslo sin kredittverdighet oppgradert fra Aa1 til AAA av Moody’s.

Begrunnelsen for oppgraderingen er konfidensiell og forbeholdt Moody’s klienter.

Bystyret i Oslo har dermed fått samme kredittverdighet som staten Norge, som fikk sin kredittvurdering bekreftet til AAA 2.oktober (utsikter; “stable”).

Om Norge

Norway and Switzerland have considerable external balance sheet strength, setting them apart from the rest of the peer group. Norway has posted, and we expect will continue to post, by far the largest general government surplus of any ‘AAA’ rated economy. Among peers, Denmark, Sweden, and Finland are the only other sovereigns to have consistently posted surpluses in the five years up to and including 2008, averaging 4% for both Denmark and Finland, and 2% for Sweden, compared with 16% in Norway.”

(Standard & Poor’s).

“Moody’s main concern in terms of credit quality relates to the corporate sector and, in particular, to some more volatile sectors such as those related to shipping and commercial real estate. Export industries could also be pressurised should the recent strengthening of the krone be sustained. The aggregate problem loans in the rated banks bottomed out at 0.6% of gross loans in 2007 and increased to around 1.9% at the end of September 2009. In addition, the rating agency cautions that high borrower concentration — which is typical of the Norwegian banks — could increase the magnitude of credit losses.”

“Losses on retail loans have remained limited and this has been supported by low interest rates and the still good employment situation. However, household indebtedness has increased, which combined with increasing interest rates and higher unemployment could make some households more vulnerable. Only DnB NOR Bank has loan exposures outside of Norway via its joint venture DnB NORD, which has been adversely affected by deteriorating asset quality in Denmark and the Baltic countries.”

(Moody’s Investor Services)

Om norske banker

“The fundamental credit outlook for the Norwegian banking system remains negative, reflecting the likely increase in credit risk-related costs given slower economic growth and banks’ exposures to higher-risk corporate sectors, such as commercial real estate and shipping. The Norwegian economy has been less impacted by the global downturn than many other European countries, largely reflecting extensive stimulus measures by the government, which have been mitigating negative pressure on the financial sector. We expect economic growth to strengthen gradually through 2010, but uncertainties regarding future developments are grounds for caution, says Moody’s Investors Service in its new Banking System Outlook on Norway. Moody’s negative outlook for the Norwegian banking system expresses the rating agency’s view on the likely future direction of fundamental credit conditions in the industry over the next 12 to 18 months.
It does not represent a projection of rating upgrades versus downgrades.
Although the Norwegian banking system has weathered the global financial crisis better than many other systems (given the stimulus measures by the government and that it is mainly exposed to the domestic market, which has suffered less than many other developed countries), it has not been unaffected. Moody’s notes that liquidity from the market has been scarcer, mark-to-market valuation of direct and indirect securities holdings has caused volatility in earnings and deteriorating asset quality has resulted in an increased need for loan loss provisions.
Moody’s remains cautious given the various uncertainties, although we also note that there are signs of stabilisation in both the economy and the banking sector. “The key risks relate to developments in credit quality, but we will also continue to keep a close eye on developments in liquidity management as the government and the central bank reverse their extraordinary support measures,” says Eeva Ketola, Moody’s lead analyst for the Norwegian banking system.”

“The capital levels of the Norwegian banks were not particularly high when the economic downturn started partly reflecting strong lending growth in the economic boom years. However, in the more uncertain environment and in the face of higher credit-related costs, most of the banks have increased their capital targets and have either improved their capital bases or are in the process of doing so. Moody’s views this development positively as improved capital levels provide banks with better buffers with which to withstand potential losses and to continue lending.”

“Norwegian banks are reliant on market funding from both the domestic and international markets. Covered bonds have opened a new source of funding since the covered bond legislation was introduced in June 2007. Issuance in the market has been disrupted by the challenging market conditions and a bulk of the covered bonds has been used in the government’s swap arrangement. Moody’s notes that the proposed changes to the central bank’s collateral requirements will increase the importance of covered bonds in the context of banks’ liquidity management. Given the government measures, the immediate liquidity concerns have abated, but Moody’s cautions that reliance on market funding makes banks vulnerable to market disruptions.”

(Moody’s Investor Service)

Negative utsikter

En rekke selskaper har fått sin kredittrating kuttet og/eller sine økonomiske utsikter svekket.

Dette gjelder blant andre:

Aker Solutions; Langsiktig kredittvurdering satt til BBB-, økonomiske utsikter satt til “negative”, (Fitch).

Teller AS: Langsiktig kredittvurdering satt til BB+, økonomiske utsikter satt til “negative”, (Fitch).

Telenor ASA: BBB+, “negative”, (Fitch).

A3, “stable”, (Moody’s).

Sparebank 1 SR-Bank: A, “negative”, (Fitch).

Storebrand Liv: BBB, “negative”, (Fitch).

Eksportfinans: AA, “stable”, (Fitch).

Sparebank 1 Midt-Norge: A, “negative”, (Fitch).

Sparebank 1 Nord-Norge: A, “negative”, (Fitch).

Sparebank 1 Boligkreditt: A, “stable”, (Fitch).

Sparebanken Vest: A-, “stable”, (Fitch).

Statkraft: BBB+, “stable”, (Fitch).

Statnett SF: A2, “stable”, (Moody’s).

Storebrand ASA: BB+, “stable”, (Fitch).

Nordea Norge: AA-. “stable”, (Fitch).

DnB NOR Boligkreditt: A+, “stable”, (Fitch).

DnB NOR: Aa3, “stable”, watch status; possible downgrade, (Moody’s).

(DnB NOR New York Branch: “negative outlook”)

Norske Skog: B3, “negative”, (Moody’s).

Norsk Hydro: Baa2, “negative”, (Moody’s).


Moody’s Sovereign Monitor, December 2009.

Fitch Ratings: Banking Systems In Emerging Europe.

Fitch Ratings: European Local and Government Outlook 2010.

Fitch Ratings: Central Europe Oil & Gas, Outlook 2010.

Moody’s Rating Report, DnB NOR, April 2009.

Standard & Poor’s Credit Rating Report, DnN NOR, January 2009.

Moody’s Rating Report, Eksportfinans, December 2009.

Moody’s Downgrade Report on Five Norwegian Banks, September 2009.

Moody’s Credit Report, Sparebanken Møre, October 2009.

Norway Country Analysis,  Energy Information Administration, August 2009.

DARPA/ZeroHedge Credit Report, Norske Skog, November 2009.

DARPA/ZeroHedge Credit Report, Royal Caribbean Cruises, November 2009.

DARPA/ZeroHedge Credit Report, SAS AB, November 2009.

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