6/22/2012

Moody's downgrades 15 major banks

Credit ratings agency Moody's downgraded 15 of the world's biggest banks on Thursday reflecting growing concern over the turmoil of financial markets. Barclays, HSBS, Deutsche Bank, Bank of America, JPMorgan Chase and Goldman Sachs were amongst those who had their ratings cut.

Moody's rating is a measure of the ability of the banks to repay their debts.

The banks “have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities,” Moody’s global banking managing director Greg Bauer said in a statement outlining the rational for the downgrades.


A downgrade usually means banks will have to pay more for its debt. Investors demand higher interest for riskier debt, which is what the downgrades represent.

However, with interest rates already at rock-bottom levels, the lower ratings may not significantly affect the cost of funding for the banks.

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