TORONTO _ Moody's Investor Services is lowering its outlook for the Canadian banking system to negative from stable due to lower government support for the sector, which remains among the highest-rated in the world.
The change is based on the Canadian government's previously announced plans to shift more burden to creditors in the event of a major financial crisis like the one in 2008-09.
The New York-based agency's ratings are intended as a guide to investors and institutional money managers who buy and sell bonds issued by banks, other companies and governments.
Moody's says its individual ratings for seven Canadian banks remain unchanged, citing their enduring earnings power.
But Moody's also says the Canadian banks are venturing into more risky businesses and countries, which could dilute the strength of their domestic credit over the next 12 to 18 months and reduce the overall system's stability.
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