Banks Were Braced for Downgrade Threat
NEW YORK (
) --
Bank of America
(BAC) - Get Report
,
Citigroup
(C) - Get Report
and other giant global securities dealers were far from surprised by the announcement Wednesday night from
Moody's Investors Service
that it would place their credit ratings on review for downgrades.
"For the past two years, the big banks/brokers have been repositioning their funding activities in advance of these potential rating agencies' adverse actions," wrote
CreditSights
analysts in a report Monday warning about the downgrades.
Stock market investors are always the last to know, which may explain why equities were softer going into Thursday's trade. Bonds, however, were rallying on the announcement, according to a
Bloomberg
report.
U.S. institutions that saw their ratings placed under review are Bank of America, Citigroup,
JPMorgan Chase
(JPM) - Get Report
,
Goldman Sachs
(GS) - Get Report
and
Morgan Stanley
(MS) - Get Report
. Both "long-term" ratings (which take into account the likelihood of government support) and "standalone" ratings (which do not) have been placed on review. The review affects 17 companies in all, most of them based in the U.S. and Europe, though
Royal Bank of Canada
(RBC) - Get Report
,
Nomura
and
Macquarie
are also under Moody's microscope.
In announcing the review, Moody's cited "more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions."
--
Written by Dan Freed in New York
.
Follow this writer on Twitter.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
