KBRA Releases Research – Coronavirus (COVID-19): Canadian Sovereign and Banks Remain Resilient

NEW YORK--()--Kroll Bond Rating Agency (KBRA) releases a report on the Canadian sovereign and the major banks amid the coronavirus (COVID-19) pandemic, which has delivered an unprecedented shock to the global economy. However, Canada and its major banks have so far displayed a very high degree of resilience and flexibility to pandemic-related extreme stresses.

The main takeaways from the report include:

  • The COVID-19 shock to Canada is not unlike its impact on other economies. But policymakers’ aggressive and proactive response to the challenges is the mark of a sovereign with extensive flexibility and shock absorption capacity.
  • Low net debt and sound practices of government guaranteed mortgage insurers reduce credit risk.
  • Major Canadian banks display a high degree of resilience against economic slowdown, due to their strong credit profiles supported by diversified franchises, solid through-the-cycle operating performance, conservative risk management practices, and a strong regulatory environment.
  • The banks’ exposure to industries more at risk from COVID-19 appears manageable.
  • Canadian banks are heavily exposed to the domestic housing market, but risks are contained by the distinct structure of the country’s mortgage market and banks’ prudent underwriting standards.

KBRA believes that Canada and its major banks are well positioned to manage this crisis, even though unknowns about virus containment, economic recovery, and the depth of longer-term dislocation muddy economic and financial projections and visibility.

Click here to view the report.

Related Publications

About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.

Contacts

Analytical

Joan Feldbaum-Vidra, Managing Director
+1 (646) 731-2362
jfeldbaumvidra@kbra.com

Joanna Drobnik, CFA, Director
+353 1 588 1250
jdrobnik@kbra.com

Joe Scott, Managing Director
+1 (646) 731-2438
jscott@kbra.com

William Cox, Senior Managing Director and Global Head of Corporate, Financial, and Government Ratings
+1 (646) 731-2472
wcox@kbra.com

Business Development

Mauricio Noé, Senior Managing Director and Head of Europe
+44 777 193 6570
mnoe@kbra.com

Contacts

Analytical

Joan Feldbaum-Vidra, Managing Director
+1 (646) 731-2362
jfeldbaumvidra@kbra.com

Joanna Drobnik, CFA, Director
+353 1 588 1250
jdrobnik@kbra.com

Joe Scott, Managing Director
+1 (646) 731-2438
jscott@kbra.com

William Cox, Senior Managing Director and Global Head of Corporate, Financial, and Government Ratings
+1 (646) 731-2472
wcox@kbra.com

Business Development

Mauricio Noé, Senior Managing Director and Head of Europe
+44 777 193 6570
mnoe@kbra.com