Sunday, June 24, 2012

No Investor Backlash Over Banks' Credit Downgrades



 “…Shares of all the firms affected by the downgrade were up Friday in early trading, several by more than 2 percent, with financials leading gains in the Standard & Poor’s 500-stock index. Businessweek writes that notably, the cost to protect Morgan Stanley debt against losses dropped to the lowest in more than seven weeks, while credit-default swaps linked to Bank of America (BAC) and Citigroup (C) also improved.

“The banks themselves were defiant. Citigroup, which took a cut from Moody’s to its lowest rating since it was formed 14 years ago, said in a statement: “Moody’s approach is backward-looking and fails to recognize Citi’s transformation over the past several years. Citi believes that investors and clients have become much more sophisticated in their credit analysis over the past few years, and that few rely on ratings alone—particularly from a single agency—to make their credit decisions.” The bank said it was “especially surprised” at the ”disproportionately adverse treatment” it says Moody’s has given U.S. banks compared with their European counterparts. Moody’s included Citi among a list of four banks, including Morgan Stanley, Bank of America, and Royal Bank of Scotland Group (RBS), that have a history of “high volatility” and problems with risk management…”

Wait, wait...there's more at http://www.businessweek.com/articles/2012-06-22/no-investor-backlash-over-banks-credit-downgrades

No comments:

Post a Comment