Moody's finally delivered its forewarned downgrade on a set of big global banks after the close Thursday, but the market reaction just hours later suggests there's a whole lot of "who cares" about the cuts.
Not everyone's going the Dick Bove route and calling the move absurd, but by and large investors don't appear too turned off to financials based on the Moody's call, at least not yet. Several of the banks in the downgrade were seeing their share prices climb.
Here's a sample. Credit Suisse was down a mere 0.1% in Swiss trading, while UBS (UBS) was up 0.4%. HSBC (HBC) was down 1.2% in Hong Kong, but in London trading afterward, it was up 0.3%. It was doing even better on the American side, advancing 1.3%. Deutsche Bank (DB) was adding 1% in Frankfurt. In U.S. trading before the opening bell, Deutsche was rising 1.4% to $35.99.
Elsewhere in the U.S. premarket, domestic banks appeared higher across the board. Bank of America (BAC) was up 1.4% at $7.93, and Goldman Sachs (GS) was adding 1% to $94.87. Morgan Stanley (MS) was gaining 3.2% to $14.40. Citigroup (C) was tacking on 1.2% to $28.15, while JPMorgan Chase (JPM) was up 1.3% to $35.96.
The move by the ratings agency came a few months after its February announcement that it was considering a downgrade for several big banks. Because of the cuts, the banks may be forced to pay higher interest rates or post additional collateral when they look to borrow. Typically, the higher a debt issuer is rated, the cheaper it is to borrow, not unlike what's seen in the consumer world with personal credit scores and histories.
Going back six months, the KBW Bank Index (^BKX) has climbed about 12%, according to Yahoo! Finance data. BofA has outpaced the index, but its U.S. colleagues Citi, Goldman, Morgan Stanley and JPMorgan Chase have trailed the sector measure.
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