Credit ratings agency Moody’s downgraded 15 global banks on Thursday after a months-long review. Today’s graphic is a summary of old and new long-term ratings for the bank holding companies and operating companies (including two downgraded earlier this years).
Moody’s has had a busy two days with European countries, downgrading one and warning another. The ratings agency warned France on Monday that it may give the country a negative outlook on its Aaa credit rating. The company went a step further Tuesday when it downgraded Spain’s sovereign ratings by two levels. Moody’s latest actions continue to leave Eurozone debt holders questioning the value of their investments.
Download the full report here to see the largest investors in French and Spanish sovereign debt.
On Wednesday, Moody’s downgraded three US banks: Bank of America (BAC-N), Citigroup (C-N), and Wells Fargo (WFC-N). The credit ratings agency had signaled the move in June, but it backed up its actions yesterday with the belief that the government is less likely to bail out the large lenders. The stock market responded yesterday with declines of 7.5%, 5.2%, and 3.9% in BAC, C, and WFC, respectively.
Moody’s has stated that it could cut the banks’ ratings further if pending Dodd-Frank provisions are implemented that would stop too-big-to-fail bailouts. The top investors in these banks will need to reevaluate their positions before another potential downgrade.
This ownership report identifies the top shareholders of each lender.
The AAA credit quality of the United States skates on thin ice as Washington remains at a stalemate over the debt ceiling issue. This week, two of the top credit ratings agencies, Moody’s and Standard and Poor’s, have stated a downgrade is possible for the US. With a lower rating, the government must raise rates which will make corporate borrowing more expensive. Therefore, investors exposed to US equities as well as sovereign debt stand to lose from the government’s disagreements.
This report identifies investors with the most exposure to US securities that will be greatly impacted by these debt issues.
As if things couldn’t get worse for Ireland, Moody’s cut its credit rating yesterday to junk status, lowering the country one notch from Baa3 to Ba1. This new report identifies the top institutional investors in Irish sovereign and corporate debt. These investors may be forced to rebalance their holdings after the move from investment grade to high yield status.
Also, check out the grahic below to see the full list of euro zone credit ratings: