Bank of America, Wells Fargo Ratings Cut by Moody’s
March 26th, 2009Via: Bloomberg:
Bank of America Corp. and Wells Fargo & Co., the biggest U.S. home lenders, were downgraded by Moody’s Investors Service on concern that they’ll need another round of government aid.
The senior-debt rating for Charlotte, North Carolina-based Bank of America was reduced to A2 from A1, according to a statement today by Moody’s. San Francisco-based Wells Fargo had its senior-debt rating cut to A1 from Aa3.
Bank of America, which reported its first loss in 17 years in the three months ended Dec. 31, has accepted capital and guarantees from the Treasury valued at $163 billion, including aid to its units. Wells Fargo, which had its first loss since 2001 in the fourth quarter, received a $25 billion investment from the U.S. Treasury in October and sold $12.6 billion in stock to the public the following month.
“U.S. banks’ access to the equity market is shut or very limited at best,” which “increases the likelihood of a capital initiative by the U.S. government,” Moody’s said.
Bank of America stock has plunged by about two-thirds since the lender raised $10 billion selling shares for $22 each in October. It advanced 48 cents today to $7.70 at 4:15 p.m. in New York Stock Exchange composite trading. Wells Fargo rose 92 cents, or 5.9 percent, to $16.42.
The senior subordinated debt rating for Bank of America was cut to A3 from A2, and the junior subordinated debt rating was downgraded to Baa3 from A2, The preferred stock rating is now at junk-level B3. Senior subordinated debt was reduced to A2 from A1 for Wells Fargo, Moody’s said today in a statement. The preferred stock rating was cut to B2 from A2.
D’ya think BOA’s purchase of Countrywide might be the albatross around their neck causing it to sink like a stone?
And Moody’s, what a freakin joke. Their “rating” service is about as reliable as tits on a bull for giving investors Anything. Oh, “they know” what’s going on with the pricing of the mortgage debt BOA now carries?
Right. If they knew then what they know now Moody’s should have reduced BOA’s rating when they bought Countrywide.
Buying debt doesn’t look so pretty now eh, BOA?
I think for the rest of us this means that relying on a credit card to get through the rough patches of low cash is going to become a much tougher business.