Moody’s downgraded the deposit rating of US top lenders JPMorgan Chase and Bank of America, as well as Wells Fargo. This comes just days after Moody’s stripped America of its Triple-A credit rating.
Bloomberg has released a report that shows the long-term deposits ratings of lenders have been lowered by one step to Aa2, which is Moody’s highest rating.
Moody’s says that the reason for downgrading the rating is due to the weakening of the ability of the government to provide support to the banks.
Moody’s has downgraded America’s rating to AA1 and changed the outlook to positive. Moody’s attributes this downgrade to America’s soaring debts and high interest payments, which are higher than other countries of the same rating.
Interest payments on debts of the government have increased significantly as deficits, debt and interest rates have grown. We expect that budget flexibility will remain low without adjustments in taxation and expenditure. Mandatory spending (including interest expenses) is projected to increase to 78% of the total by 2035, from 73% currently.
Bank of America’s senior unsecured credit ratings were also downgraded for certain rated branches and subsidiaries. Moody’s has also cut counterparty ratings of some Bank of America units, JPMorgan, and Wells Fargo to Aa2 (from Aa1).
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This article JPMorgan Chase Bank of America Wells Fargo all downgraded by Moody’s following US Government loss of AAA rating: Report first appeared on The ICD.
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