Reuters reports that the bond markets are treating Morgan
Stanley like a junk-rated company, and the investment bank's higher borrowing
costs could already be putting it at a disadvantage even before an expected
ratings downgrade this month.
Bond rating agency Moody's Investors Service has said it may
cut Morgan Stanley by at least two notches in June, to just two or three steps
above junk status. Many investors see such a cut as all but certain.
Many U.S. banks are at risk of a downgrade, but ratings cuts
could affect Morgan Stanley most because of the severity of the cut and because
of its relatively large trading business.
Even before any downgrade, the bank is suffering in the bond markets.
Prices for Morgan Stanley's bonds and credit derivatives have been trading at
junk levels since last summer, according to Moody's Analytics. Prices moved
further into the non-investment-grade category over the past two weeks amid
troubles in Greece and other Euro zone nations…..
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