NEW YORK — Standard & Poor's Ratings Services on Tuesday cut its outlook on Citigroup Inc. and Bank of America Corp. to "negative" from "stable," saying bond holders could take a hit if the government steps in again to support banks.
The negative outlook signals the possibility of a future downgrade.
However, S&P affirmed the banks' investment-grade counterparty credit and debt ratings. S&P's counterparty credit ratings on Citigroup and Bank of America stand at A and A-1.
S&P defines an A rating as one given to a company that has a "strong capacity" to meet its debt payments over time but is more vulnerable to an economic downturn or a change in circumstances than companies that have the higher ratings of AAA or AA.
S&P credit analysts said the outlook revision on the banks "reflects our increased uncertainty about the U.S. government's willingness to provide additional extraordinary support to highly systemically important financial institutions in a way that will benefit debt holders."
S&P said sentiment in Congress regarding any future bailouts is changing, with a goal of reducing taxpayer exposure. The ratings agency cited a recently passed House bill that would penalize bond holders if taxpayer funds are used in company-specific bailouts.
(AP) read more here
No comments:
Post a Comment