DBRS has placed its ratings of the preferred shares and Tier 1 innovative instruments for all the Canadian banks it rates “under review with negative implications” following changes made to its methodology, the rating agency said Monday.

The changes in methodologies, which will be made public shortly, “reflect the revision of our views on external support as it relates to preferred shares and the elevated risk of non-payment of preferred dividends relative to the risk of default indicated by senior debt ratings based on the more severe business environment being faced by global banks,” it explained. “They do not reflect any specific credit event.”

Under the previous methodology, many of the preferred shares and Tier 1 innovative instruments ratings benefited from a one-notch uplift in October 2006, it said. “The primary factor that has led DBRS to rethink our support assessment methodology as it applies to preferred shares and Tier 1 innovative instruments is recent actions taken in other jurisdictions that demonstrate no systemic external support for preferred shares,” it added.

IE