Markets Rebuff Moody’s Downgrades, Sailing Strong in Afternoon Trade

A day after Moody’s downgrade of 15 large investment banks all over the world, markets today seem to care less about ratings and downgrades. The Dow Jones was trading nearly 0.5 percent higher accompanied by NASDAQ and S&P500.

[caption id="attachment_13305" align="aligncenter" width="300" caption="Bank Downgrades"]Bank Downgrades[/caption]

Citigroup, in a press release, strongly reacted to the ratings downgrades calling it “arbitrary and completely unwarranted.” Citigroup further asserted its position by emphasizing that it had over $420 billion of surplus liquidity held in cash and government securities. In further strong statements Citi says, “More broadly, Citi believes that investors and clients have become much more sophisticated in their credit analysis over the past few years, and that few rely on ratings alone – particularly from a single agency – to make their credit decisions… In our view, investors and clients should make their own decisions and not rely on ratings the genesis of which is opaque.”

Morgan Stanley, which was much considerate in its reaction to the ratings downgrade, said, “While Moody’s revised ratings are better than its initial guidance of up to three notches, we believe the ratings still do not fully reflect the key strategic actions we have taken in recent years.” Markets had expected Morgan Stanley to be downgraded by 3 notches whereas Moody’s did only 2.

Among the US banks downgraded yesterday Bank of America and Citigroup are only 2 notches above the junk while JP Morgan Chase has the highest ratings at A2.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 30 percentage points in 13 months Learn how!

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!