It's The Economy Stupid: Moody's Bank Downgrades

Moody’s finally pulled the trigger on releasing their bank downgrades.  Perhaps Moody’s had so much trouble releasing the info because they are always trying to drive the bus by looking in the rear view mirror.  Moody's just took a hatchet to the credit ratings of the biggest global banks.  In particular they seemed to have ignored the changes that the U.S. banks have made to their balance sheets since 2008.  They have an excellent record of warning you today about what happened last week.  Forecasting?  Not so much.

 

Bank Name – Holding Co Rating/Operating Co Rating

 

MOODY’S 1 NOTCH DOWNGRADE EXPECTED vs ACTUAL:

Bank of America -  Baa1/A2 down to Baa2/A3, -1 notch, as expected

Nomura -  Baa2/Baa1 down to Baa3/Baa2, -1 notch, announced in March

RBS - A3/A2 down to Baa1/A3, -1 notch, as expected

Societe Generale - NR/A1 down to NR/A2, -1 notch, as expected

 

MOODY’S 2 NOTCH DOWNGRADE EXPECTED vs ACTUAL:

Barclays -   A1/Aa3 down to A3/A2,  -2 notches,   as expected

BNP Paribas - NR/Aa3 down to NR/A2,  -2 notches,   as expected

Citigroup - A3/A1 down to Baa2/A3,  -2 notches,  as expected

Credit Agricole - NR/Aa3 down to NR/A2,  -2 notches,   as expected

Deutsche Bank - NR/Aa3 down to NR/A2,  -2 notches,   as expected

Goldman Sachs - A1/Aa3 down to A3/A2,  -2 notches,   as expected

HSBC Holdings - Aa2/NR down to Aa3/NR, -1 notch, ***BETTER THAN EXPECTED***

JPM - Aa3/Aa1 down to A2/Aa3,  -2 notches,  as expected

Macquarie - A2/A1 down to A3/A2, ONLY -1 notch,] announced in March

RBC - NR/Aa1 down to NR/Aa3,  -2 notches,  as expected

 

MOODY’S 3 NOTCH DOWNGRADE EXPECTED vs ACTUAL:

Credit Suisse - Aa2/Aa1 down to A2/A1,  -3 notches,  as expected

MS - A2/A1 down to Baa2/Baa1,  -2 notches,  ***BETTER THAN EXPECTED***

UBS - NR/Aa3 down to NR/A2,  -2 notches,  ***BETTER THAN EXPECTED***

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury