Downgrade Day has arrived.
The markets have been awaiting this day since Moody’s put under review for a downgrade the credit ratings for 17 large global banks back in February, including five of the biggest U.S. financial firms by assets.
The downgrades are expected to raise borrowing costs and crimp some lucrative trading businesses at the banks, including at J.P. Morgan, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley.
Below are the long-term debt ratings of the five U.S. firms whose ratings were under review, and the impact they cited in first-quarter financial filings.
J.P. Morgan
New Rating: A2 (2 notches)Previous Rating: Aa3
Moody’s guidance: Up to a two-notch downgrade
What the Banks said: J.P. Morgan said its costs could hit $3.45 billion for a two-notch downgrade.
Bank of America
New Rating: Baa2 (one notch)Previous Rating: Baa1
Moody’s guidance: Up to a one-notch downgrade
What the bank said: Bank of America said a one-notch downgrade could deliver a $2.7 billion hit.
Citigroup
New Rating: Baa2 (2 notches)Previous Rating: A3
Moody’s guidance: Up to a two-notch downgrade
What the bank said: Citi estimated that a hypothetical two-notch downgrade could deliver a $2.1 billion hit.
Goldman Sachs
New Rating: A3 (2 notches)Previous Rating: A1
Moody’s guidance: Up to a two-notch downgrade
What the bank said: Goldman Sachs said its costs could hit $2.2 billion for a two-notch reduction
Morgan Stanley
New Rating: Baa1 (2 notches)Previous Rating: A2
Moody’s guidance: Up to a three-notch downgrade
What the bank said: Morgan Stanley said it could pay as much as $9.6 billion for a three-notch downgrade by multiple rating agencies.
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