Nomura Securities on Global Banks: Moody’s Expects Global Bank Ratings to Decline
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Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
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Nomura Securities on Global Banks: Moody’s Expects Global Bank Ratings to Decline - Global Investment Banks Face Rating Pressures (Again)
Analyst, Glenn Schorr, said, "Average rating for large capital markets firms could slip to Baa range We think investors should be aware that large global investment banks may face headline risks from credit ratings downgrades by Moody’s (who is expected to publish its ratings review results during the week of May 14th). While capital, liquidity, and leverage are all in better shape, the economy is healing and the banks just passed a severe stress test, Moody's feels the business just isn't as good as they used to think (more severe tail risk, confidence sensitivity, opacity, etc). For the U.S. firms, Moody’s has said that Bank of America (NYSE: BAC), Citi (NYSE: C), and Morgan Stanley (NYSE: MS) could see their LT ratings lowered to Baa2, while Goldman (NYSE: GS) and JPMorgan (NYSE: JPM) could see their LT ratings fall to A3 and A2, respectively (risk mgmt track record counts a lot for Moody’s)."
"If history is any guide, the universal bank and broker stocks could decline in the range of 2-5% when the Moody’s downgrades occur. On the day of S&P’s bank ratings downgrade (11/29/2011), the five large bank stocks we cover fell 2% on average, while the S&P 500 closed up 0.2%."
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Analyst, Glenn Schorr, said, "Average rating for large capital markets firms could slip to Baa range We think investors should be aware that large global investment banks may face headline risks from credit ratings downgrades by Moody’s (who is expected to publish its ratings review results during the week of May 14th). While capital, liquidity, and leverage are all in better shape, the economy is healing and the banks just passed a severe stress test, Moody's feels the business just isn't as good as they used to think (more severe tail risk, confidence sensitivity, opacity, etc). For the U.S. firms, Moody’s has said that Bank of America (NYSE: BAC), Citi (NYSE: C), and Morgan Stanley (NYSE: MS) could see their LT ratings lowered to Baa2, while Goldman (NYSE: GS) and JPMorgan (NYSE: JPM) could see their LT ratings fall to A3 and A2, respectively (risk mgmt track record counts a lot for Moody’s)."
"If history is any guide, the universal bank and broker stocks could decline in the range of 2-5% when the Moody’s downgrades occur. On the day of S&P’s bank ratings downgrade (11/29/2011), the five large bank stocks we cover fell 2% on average, while the S&P 500 closed up 0.2%."
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Analyst CommentsRelated Entities
JPMorgan, Citi, Morgan Stanley, Bank of America, Standard & Poor's, Nomura
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