Entries in Credit Ratings (4)


Moody's Downgrades Six European Countries, Warns Three Others

Scott Eells/Bloomberg via Getty Images(LONDON) -- Moody's downgraded the credit ratings of six European countries on Monday and warned that three others, including Britain, could be next.

The credit ratings agency cut Italy's grade to A3 from A2, Spain's to A3 from A1, Portugal's to Ba3 from Ba2, Malta's to A3 from A2, Slovakia's to A2 from A1, and Slovenia's to A2 from A1.  All six countries were also given negative outlooks.

Meanwhile, Moody's gave negative outlooks to the United Kingdom, France and Austria, meaning that the countries could lose their AAA ratings in the future if the economy remains weak.

Monday's downgrades and warnings are a reminder that the region continues to be plagued by debt problems.´╗┐

Copyright 2012 ABC News Radio


How the S&P Bank Credit Downgrades Will Affect You

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- Credit ratings agency Standard & Poor’s downgraded 37 U.S. and European banks based on changes to its methodology on Tuesday. Fortunately for consumers who are retail banking customers, the change will not affect everyday banking, says Jody Lurie, Janney Capital Markets’ corporate credit analyst.

“Overall this ratings change isn’t speaking to the banks themselves but banks adjusting for regulation and policy changes that have occurred over the past couple years,” she said.

The action was similar to competitor Moody’s downgrade of Bank of America, Citibank and Wells Fargo in August.

Lurie said banks’ liquidity seems to be “ok” although banks continue to remain under pressure with concern over the future of European sovereign debt and the U.S. economic outlook.

Standard & Poor’s downgraded the largest U.S. banks, Goldman Sachs, Bank of America, Citigroup, Morgan Stanley, Wells Fargo, JPMorgan Chase and Bank of New York Mellon, possibly affecting their short-term funding costs. The majority of the 37 downgraded banks were European. Only 15 banks had ratings cuts while the majority had lowered outlooks.

S&P lowered Bank of America to A- from A with a negative outlook and decreased Wells Fargo to A+ from AA- while maintaining its outlook at negative. S&P maintained State Street’s  A+ rating, but changed its outlook to negative from stable.

“The banking industry continues to be under pressure and it’s a rocky road in the near term,” Lurie said.  “I think it will take more steps to reach a more stable position but they’ll eventually get there.”

Lurie said although S&P’s downgrade will stir up the investor community in the short-term, she expects long-tem sentiment toward the sector to remain “in a state of flux.” She said the action demonstrates that the banking sector is still in a period of transition, as new regulation, such as the Dodd-Frank Act’s financial regulatory reform, and events in Europe overshadow progress on asset quality.

Lurie said she was surprised that the markets reacted more negatively to Moody’s downgrade of three banks in August, also due to methodology, even after Moody’s warned in June it was considering doing so. Lurie points out that the financial markets may have been more volatile in August, when S&P downgraded U.S. sovereign debt.

Copyright 2011 ABC News Radio´╗┐


Merrill Lynch Warns of Another US Debt Downgrade

Jin Lee/Bloomberg via Getty Images(NEW YORK) -- The United States is in for another credit downgrade by year’s end if Congress fails to agree on a long-term plan to tame the nation’s $14.8 trillion deficit, Merrill Lynch warned.

In a research note, the Bank of America unit predicts that either Moody’s or Fitch will move to downgrade the U.S. AAA rating. Standard & Poor’s cut the nation’s bond rating in August, causing the stock and bond markets to tumble, after months of bickering by Congress on how to best reduce spending and cut the deficit. The United States spends about 40 percent more annually than it collects in taxes.

Instead of agreeing on spending cuts or new taxes, Congress and the president appointed a bipartisan “super committee” to reach a deal to reduce the U.S. deficit by at least $1.2 trillion by Nov. 23. If there’s no deal, automatic across-the-board cuts mostly in discretionary spending would occur.  Congress would be free to stop any or all of those reductions, if it chooses and the president agrees.

Moody’s Investors Service hasn’t said what it will do if there’s no deal, but it has placed U.S. credit under review for a possible downgrade.

Copyright 2011 ABC News Radio


Fannie Mae, Freddie Mac Credit Ratings at Risk, Says S&P

Mark Wilson/Getty Images(NEW YORK) -- Standard & Poor's Ratings Services may lower the AAA ratings of Fannie Mae and Freddie Mac.

The home loan guarantors, placed under government conservatorship in 2008, depend heavily on the U.S., which is also under review for a possible downgrade.  S&P said Friday in a statement that this "direct reliance on the U.S. government" jeopardizes Fannie and Freddie's credit status.

On Thursday, S&P announced the U.S. government is on CreditWatch, and could have its credit rating lowered if Congress and the Obama Administration failed to reach an agreement concerning the nation's debt.

Standard & Poor's also said Friday that AAA-rated Federal Home Loan Banks along with 126 debts guaranteed by the Federal Deposit Insurance Corp. has been placed on CreditWatch.

Copyright 2011 ABC News Radio

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