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Reply #49: BofA, Goldman Sachs, Citigroup Credit Ratings Cut by S&P [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-30-11 09:00 AM
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49. BofA, Goldman Sachs, Citigroup Credit Ratings Cut by S&P

Bank of America Corp. (BAC), Goldman Sachs Group Inc. (GS) and Citigroup Inc. had long-term credit grades reduced to A- from A by Standard & Poors after the ratings firm revised criteria for dozens of the worlds biggest lenders.

S&P made the same cut to Morgan Stanley and Bank of Americas Merrill Lynch unit today. JPMorgan Chase & Co. (JPM) was reduced one level to A from A+. S&P upgraded Bank of China Ltd. (3988) and China Construction Bank Corp. to A from A- and maintained the A rating on Industrial & Commercial Bank of China Ltd. (1398), giving all three lenders higher grades than most big U.S. banks.

The moves may increase pressure on firms already dealing with weak economies and Europes mounting sovereign debt crisis. Lenders including Bank of America, Citigroup and Morgan Stanley have said they may have to post billions of dollars of additional collateral and termination payments on trades because of a one-level downgrade in their credit ratings....The ratings firm also downgraded UBS AG (UBSN) and Barclays Plc (BARC) to A from A+, and HSBC Holdings Plc (HSBA) to A+ from AA-, according to the report.

Change in Technique

S&P, a unit of New York-based McGraw-Hill Cos. (MHP), has been changing the way it looks at debt after its faulty grades contributed to the credit-market seizure that brought down Lehman Brothers Holdings Inc. and Bear Stearns Cos. It started to review the methodology in December 2008, months after the collapse of those two firms.
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