Leading economic rating agency Moody’s again made the headlines this week when they announced on today that it could be about to cut the credit ratings of 17 global and 114 European financial institutions.
“Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions,” a Moody’s spokesman said.
The 17 banks and financial security companies are all involved in international capital market operations, Among the most notable, long-term credit rating of UBS, Credit Suisse and Morgan Stanley could be slashed by as much as three notches.
Some of the largest banking institution are amongst those that could be downgraded by two notches, including; Barclays, BNP Paribas, Credit Agricole, Deutsche Bank, HSBC Holdings, and Goldman Sachs. While together with these European banks, the Bank of America and Japanese Nomura did not escape mention and threat of ratings reductions.
Moody’s have cited the fact that in the current climate there is significantly more fragile funding conditions, increased regulatory burdens and a tougher economic environment for its review of banks and securities firms with global reach.
Today’s announcement follows a Moody’s statement at the beginning of the week where downgrades in European countries sent shock waves across trading markets. The ratings of six Euro-zone counties including Italy, Spain and Portugal were reduced and and warned it could strip France, Britain and Austria of their top-level AAA grade.
Standard & Poor’s cut France’s and Austria’s top ratings and downgraded seven other euro zone nations last month. It also cut the euro zone’s bailout fund by one notch.
