They’re gonna downgrade their outlook from stable to negative though, just in case. [WSJ]
- 23 Jul 2012 at 6:30 PM
- 22 Jun 2012 at 10:03 AM
Are we supposed to care about these downgrades? I like Glenn Schorr at Nomura, emphasis mine:
We think the net financial impact of these downgrades will be manageable as 1) potential collateral calls are small percentages of these firms’ liquidity pools; 2) counterparties have been preparing for this for some time and ratings downgrades have been an issue for the last 2+ years (there was little impact on Citi and BAC when they were downgraded back in September of 2011); 3) ratings are a relative game: given that Moody’s downgraded all capital markets firms, no single-firm is an outlier, so we don’t expect to see one company uniquely impacted. Yes, we get that counterparties looking to do long-dated derivatives might prefer a single-A rated entity, but as Basel III is implemented and more derivatives move to central clearinghouses, counterparty ratings should become less meaningful and clients will adapt (and not do all their business with JPM and GS).
It would be a serious misinterpretation of credit ratings to think of them as a global rank ordering of risks in the world. “A-rated things are of course safer than BBB-rated things,” you say, and get punched in the face repeatedly by life. A-rated things are not safer than BBB-rated things. A-rated RMBS CDOs were not safer than BBB-rated corporates, A-rated corporates are not safer than BBB-rated municipalities, and A-rated banks are it goes without saying not safer than BBB-rated software companies. Nobody really suggests otherwise – if they did, this graph would be a huge embarrassment to Moody’s: Read more »
- 21 Jun 2012 at 5:54 PM
Moody’s Investors Service downgraded the debt ratings of 15 major international banks and securities firms on Thursday, a move that could cost the banks billions of dollars in extra collateral…U.S banks that were downgraded included: Bank of America, Citigroup, Goldman Sachs, JPMorgan, and Morgan Stanley. “All of the banks affected by today’s actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities,” Moody’s said in a statement. “However, they also engage in other, often market leading business activities that are central to Moody’s assessment of their credit profiles,” the firm added. “These activities can provide important ‘shock absorbers’ that mitigate the potential volatility of capital markets operations, but they also present unique risks and challenges.” [CNBC, related]
- 11 Nov 2011 at 5:17 PM
On account of recent events. Read more »
- 21 Sep 2011 at 2:39 PM
Michael Feroli at JPMorgan had an interesting note this morning (via ZH) on the Republican letter to Bernanke, pointing out that this sort of saber-rattling against easing might actually make it more likely as a way for the Fed to assert its independence.
Moody’s downgrade of BAC/WFC/C, on the other hand, may have the opposite effect, precisely because the government hasn’t yet been able to declare its independence from the ratings agencies. Moody’s cut the banks’ credit ratings because they think the government is less likely to bail them out if they run into trouble. And that downgrade itself may have the effect of making the government less likely to bail out the banks if they run into trouble.
Read more »
- 21 Sep 2011 at 12:39 PM
He may be in a mood. Read more »
- 19 Jul 2011 at 2:51 PM
Apparently Maryland, South Carolina, New Mexico, Tennessee and Virginia should be preemptively quaking in their boots. Read more »
- Hedge Fund Manager Keeps A Detailed Record Of All The Asses He's Grabbed
- Christmas Come Early At Casa De Falcone
- Area Man Underestimates Just How Much Steve Cohen Hates His Ex-Wife
- Opening Bell: 11.25.14
- Former JP Morgan Employee Trades "Root Of All Evil" Gig For Extreme Water Sports
- Bonus Watch '14: Congrats On Being An Investment Banker
- Hedge Funds Great At Picking Absolutely The Worst Stocks This Year
- How Much Did Goldman Sachs Make For Losing Muammar Gaddafi $1.2 Billion?
- Restaurant Offering 35k Thanksgiving Dinner Just Saying Think About It
- Federal Prosecutors Don't Appreciate Former Jefferies Trader's Vivid Imagination
- Executive Editor
- Bess Levin
How Can We Help You?
- Send tips to:
- For tech issues email:
- For advertising or events email:
- For research or custom solutions email:
- Dealbreaker is published by Breaking Media.
For a full list of our sites, services and staff visit breakingmedia.com