Moody’s considers downgrading six banks
Moody’s Investors Service cited extremely volatile funding conditions for banks exposed to the risk of “uninsured deposit outflows.” First Republic Bank, Western Alliance Bancorp., Intrust Financial Corp., UMB Financial Corp., Zions Bancorp., and Comerica Inc. are under review by Moody’s. The rating agency downgraded Signature Bank’s debt rating to junk Monday after it failed Sunday. Shares of regional banks tanked on Monday but were slowly climbing Tuesday.
What does downgrading a bank do? A bond rating estimates a creditor’s ability to repay its debts. It’s generally issued by a rating agency like Moody’s. A downgrade lowers that credit rating, meaning that the credit issuer, or bank, is likely less creditworthy, according to the credit rating agency. A lower credit rating communicates a higher perceived risk of default. They can also make it more expensive for firms to borrow money.
Dig deeper: Read Jerry Bowyer’s column in WORLD Opinions on experts’ no-confidence vote for America’s 2023 economy.
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