Moody’s changed its outlook on Norway’s banking system from negative to stable yesterday (Wednesday) as a result of improved and above euro-area growth forecasts, but also noted that Norwegian banks’ high reliance on wholesale funding could expose them to market volatility.

Moody’s said last week that the demise of Sparekassen Lolland is credit negative for Danish banks, but an official at Jyske Bank, which is taking over the regional savings bank, said that the rating agency’s view is backwards looking and that the takeover sends a positive signal.

The outlook for the Finnish banking system remains negative, said Moody’s yesterday (Wednesday), citing as driving factors its expectations of a continued weak operating environment, increasing household indebtedness, and high reliance on wholesale funding in the context of prevailing capital markets volatility.

DLR Kredit cut its ties with Moody’s on Monday, a move that it had planned for some time and was able to implement after its General Capital Centre was rated by S&P last week, and the issuer believes having triple-A ratings in place is having a beneficial impact on its December auctions.

Jane Soldera, vice president, senior credit officer at Moody’s, spoke to The Covered Bond Report’s Susanna Rust about the rating agency’s stance on key issues facing Nordic covered bonds.

Any shift to more unsecured funding prompted by possible restrictions on covered bond issuance by the Norwegian FSA could prove challenging, Moody’s cautioned on Monday, although it said such a move could benefit senior bondholders.

Sweden’s covered bond legal framework is above average, with strengths outweighing weaknesses, Moody’s said on Monday upon releasing the second in a special series of reports that assess and rank a common set of legal features in covered bond jurisdictions.

Fitch put its AAA rating of Realkredit Danmark capital centre T issuance on Rating Watch Negative on Tuesday as it began implementing updated covered bond rating criteria, under which it has assigned Discontinuity Caps and outlooks to programmes from Denmark and Norway.