ONE of the most influential debt ratings agencies, Standard & Poor's, this week issued a paper on why Australia's big banks should retain their AA credit rating over the medium term. That the Australian banks have a stable ratings outlook is an unadulterated positive for investors, and should be a matter of national pride commensurate with the charms of the Great Barrier Reef and consecutive appearances in the World Cup. Two years ago there were more than 50 banks around the globe with AA credit ratings, but now there are just nine: ANZ (AA) Commonwealth (AA) National Australia Bank (AA) Westpac (AA) Bank of Nova Scotia (AA-) DBS Bank (AA-) Nordea Bank (AA-) Royal Bank of Canada (AA-) Toronto-Dominion Bank (AA-) Overseas investors have questioned why the Australian banks have retained their strong ratings through the credit crisis while bigger global players have been downgraded. The Australian banks' stable outlook has come about through a mixture of good management and regulation, and what the ratings agency refers to as a "less fiercely competitive environment" than in some overseas markets, which has meant less risky lending practices. A rating of AA and a stable outlook for that rating means the big banks can raise money in overseas capital markets at relatively attractive rates and are among the first to raise funds without the help of the costly Government guarantee. This is a good thing when, according to the Reserve Bank, they are reliant on offshore wholesale sources for about 80 per cent of their long-term funding, a disproportionate level when compared with most of their overseas peers. These are no small numbers. In the first six months of this year, industry publication DCM Review estimates Australian banks raised about $64 billion in overseas capital markets, putting them well on the way to eclipsing last year's record offshore issuance. If home prices hold up and our economy stays out of recession, it will be due to two key factors: the willingness of the Chinese to buy our natural resources and the credit intermediation powers of our Big Four banks. But nothing can be taken for granted. Standard & Poor's warns that it would have to review its position if bad debt charges increased materially or stress re-emerges in wholesale funding markets. Indeed, a few weeks earlier it downgraded the prospects for more than 20 mostly small US banks but also including big mortgage bank Wells Fargo. Many of the comments that accompanied the notice of the downgrade could be applied to the Australian banks if you shut one eye. For instance, the agency said that the downgrades reflected its belief that "operating conditions for the industry will become less favourable than they were in the past … and (incur) tighter regulatory supervision". The other major ratings house, Moody's, already describes the outlook for the big Australian banks as negative, saying business asset quality is likely to be the most important near-term driver of ratings. Crucially, the prospects of all the major banks holding their ratings are not homogeneous. In other words, it is quite possible that one of the big banks could have a downgrade while the others hang on to their rating. Share investors need to be aware of this and seek advice about which bank is the most at risk over the longer term. Having to operate under a single A credit rating could cost a major bank about $200 million in extra annual funding costs. S&P says that while the Big Four banks are similar in many ways, the impact of market developments on individual banks will be assessed case by case. Ratings could be lowered in the event of mergers and acquisitions, a bank pursuing a riskier business model or adverse investor sentiment. It also notes that some banks have been more prone to one-off events, suggesting potential differences in risk management and culture (it does not include examples). The banks are working hard to ensure they are not delivered any nasty credit rating surprises. For instance, NAB in its May interim results presentation cited the maintenance of its AA credit rating as one of its eight priorities in navigating a recession. In S&P's eyes, NAB's British exposure means that it has a moderately higher credit risk than its peers in the shorter term, but over the longer term this exposure should be a source of diversity and growth.

More people are seeing condominiums as an attractive investment opportunity than was the case a year ago, according to a survey released Monday. TD Canada Trust said 44% of respondents in a survey of urban Canadians said conditions had improved over the last year with regard to the prospects of buying a condo for investment purposes.

That was up from 21% in a similar survey done last year. The bank said lower prices and Canada mortgage rates are the main reason people are being drawn to condos as a way to make money over the longer term. "This is a good time to explore a condo purchase given that mortgage rates are very attractive right now and many condos have dropped significantly in price," Joan Dal Bianco, the bank's vice-president of real estate secured lending, said in a statement In fact, 43% of the respondents said if they couldn't afford a condominium right now, they'd consider partnering with a friend or relative to buy one for investment purposes.

But there were other reasons than investing people had for wanting to buy a condo. The most popular one, cited by 39 per cent of survey takers, was that condos require less maintenance than house do.

The second most cited reason for buying a condo, a 21 per cent, was that they're more affordable than houses. The survey, done by Angus Reid Strategies, involved 200 respondents in the cities or surrounding areas of Vancouver, Calgary, Toronto, Montreal and Halifax between March 30 and April 7.