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Bond Market News

Macquarie Upgraded to A2 by Moody’s

Macquarie Group’s ratings were upgraded to A2 from A3 by Moody’s. The primary reasons cited were Macquarie’s very strong profitability supported by their diversification to more stable income sources, and its high levels of liquidity and strong capital adequacy. Its strong profitability can be attributed to its commodities business that generates high levels of revenue and hence also boosts their profits. While their commodities and capital markets business face potential earnings volatility, their asset management business is expected to help stabilize this volatility through stable and recurring revenues. Moreover, Macquarie’s large and expanding Australian retail and commercial banking businesses complement their stable sources of revenue. Macquarie Bank’s regulatory CET1 ratio stands at 13.7% and thus indicates a strong capital position, Moody’s notes, adding that it is also expected to stay committed to prudent capital management.

Macquarie’s 6.125% Perps were trading stable at 87.2 cents on the dollar, yielding 10.3% to call.

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