Moody's: Australia, Canada, New Zealand and Sweden sovereign credit profiles resilient to rising household debt

The US-based ratings agency, Moody’s Investors Service, published a latest review on Australia, Canada, New Zealand and Sweden sovereign credit profiles, in light of the rising household debt.

Key Points:

Australia, Canada, New Zealand and Sweden -- all rated Aaa stable -- are exposed, through different channels and to varying degrees, to a potential housing market correction.

However, unless the reversals in house prices were accompanied by other long-lasting negative shocks, they would not fundamentally undermine the sovereigns' credit profiles.

Moody's notes that all four countries have strong banking systems with high capitalization levels, conservative business models and strong liquidity, which lower the sovereigns' banking system-related contingent liability risks. Such contingent liabilities were among the highest costs of housing crises elsewhere.