NEW YORK — Moody’s Investors Service lowered the credit ratings of 15 of the world’s largest banks late Thursday, including Bank of America, JPMorgan Chase and Goldman Sachs, saying their long-term prospects for profitability and growth are shrinking.
The ratings agency said it was especially concerned about banks with significant financial-markets businesses because those markets have become so volatile. Some of the largest European banks were also downgraded, including Barclays, Deutsche Bank and HSBC.
The downgrades mean Moody’s is more concerned about the ability of the banks to repay their debts. Moody’s had said in February that it was considering downgrading the credit ratings of major banks in the U.S. and in Europe.
A downgrade usually means that it becomes more costly for banks to raise money by selling debt. Investors demand higher interest for riskier debt, which is what the downgrades represent. However, with interest rates already at rock-bottom levels, the downgrades may not affect the cost of funding for the banks that much.
Smacked down
Among the banks that were downgraded:
• Bank of America’s debt was downgraded to Baa2 from Baa1. That’s just a couple of notches above junk status.
• JPMorgan Chase‘s debt was downgraded to A2 from Aa3
• Citigroup‘s to Baa2 from A3
• Morgan Stanley‘s to Baa1 from A2
• Goldman Sachs‘ to A3 from A1
• HSBC‘s to Aa3 from Aa2
• Barclay‘s to A3 from A1
The Associated Press
