Bank of America Corporation (NYSE: BAC) has been no stranger to troubles nor any stranger to controversies. It is now looking to be no stranger to credit rating downgrades. Moody’s has downgraded the credit ratings of Bank of America.
On July 27 came word that Moody’s affirmed the ratings for BofA, Citigroup Inc. (NYSE: C) and Wells Fargo & Co. (NYSE: WFC). On that same date it supported a negative outlook on the group.
Today’s move after everything we saw in August is probably not a huge shock to those in the know, but this could be a headline dominating event for the rest of the day and for the newspapers on Thursday. This remains just one more flag of caution that will act to drive the sentiment away from the banks.
It is too bad that the news is on the heels of when the bank has been making efforts to correct its ship. The “A2″ rating was cut down to “Baa1″ based in part due to a low probability of implied government support. This downgrade is on the senior debt and subordinated debt.
What is interesting is that the lack of government support trumps the rest. Moody’s noted that the downgrades do not reflect the weakening of credit quality and the report went on to note that BofA has shed legacy and non-core assets and said that the bank has made significant progress in improving both its capital and liquidity rates.
The stock market is shooting first and asking questions later. BofA shares are down 4% at $6.62 and the 52-week range is $6.01 to $15.31.
Update at 12:50 PM EST: Moody’s did come out and downgrade Wells Fargo & Co. (NYSE: WFC) to A2 from A1 on its senior debt rating.
Update 12:58 PM EST: Moody’s has also cut Citigroup’s P-2 rating but confirmed its long-term senior ratings.
JON C. OGG