Moody's mulls over Aussie bank bond ratings Moody's will consider downgrading its credit ratings on subordinated debt issued by the Australian banks, as global regulators take a tougher line on bondholders in distressed banks. The credit agency said on Monday it had recently changed its assumptions about the likelihood of government support for holders of subordinated debt, which ranks after other types of debt if a company fails. During the global financial crisis, governments tended to support struggling banks by injecting equity, which shielded bondholders from wearing losses. It is reviewing its ratings around the world, placing its ratings for the subordinated debt of eight Australian banks ""on review for downgrade."" The change does not affect the credit ratings on higher-ranking bank debt. "Government policy has evolved towards the adoption of "burden sharing" principles, and gradually away from the automatic bail out of all creditors over the last few years" the managing director of Asia Pacific Financial Institutions at Moody's, Stephen Long, said. The potential downgrades were ""not in any way related to any deterioration in the affected banks' fundamental credit quality,"" the report said.