Banking, finance, and taxes
Bank of America Takes S&P Downgrade (BAC)
Published:
Last Updated:
It seems that bond ratings agencies still have some merit, or at least investors still read what they write. Standard & Poor’s has lowered and reaffirmed some ratings for Bank of America Corp. (NYSE: BAC).
S&P cut the long-term counterparty credit rating of the bank to “A” from A+”” and affirmed its “A-1” short-term ratings. Other changes are as follows:
S&P has affirmed its ‘AAA’ rating on the FDIC-guaranteed debt of B of A and its subsidiaries. As far as the outlook, S&P has said that the outlook of B of A and its bank subsidiaries remains negative.
As part of the note, S&P said, “B of A’s creditworthiness has deteriorated given its exposure to consumer credit and more generally to various asset types that have approached–and, in certain instances, exceeded–the stress tests we used as a basis for our Dec. 19, 2008, sector review of large complex banks and brokers…. Our ratings on BofA consider a material weakening in the operating environment leading to declines in earnings. Further write-downs associated with the Countrywide and Merrill Lynch acquisitions are also a possibility.”
S&P also now expects less than the original target of a 50% to 75% of normal earnings run rates. The S&P note also sees substantial downside to its own expectations for earnings. Interestingly enough, B of A stock is still up about 1% at $3.67 today.
JON C. OGG
MARCH 3, 2009
Are you ready for retirement? Planning for retirement can be overwhelming, that’s why it could be a good idea to speak to a fiduciary financial advisor about your goals today.
Start by taking this retirement quiz right here from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes. Smart Asset is now matching over 50,000 people a month.
Click here now to get started.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.