- Two weeks following the impact of Moody's Investors Service on the financial markets, which had caused a stir by reducing the credit ratings of numerous American banks, the credit rating agency S&P made a similar move. It downgraded its rating and expectations for several banks, attributing this decision to a combination of pressures arising from the challenges faced by these banks.
- S&P lowered the ratings of Kaycorp, Comerca, Valley National Bancorp, UMB Financial, and Associated Bancorp by one notch, as stated in an official announcement. This adjustment was influenced by the interplay of rising interest rates and shifts in bank deposits across the sector. Moreover, S&P shifted its outlook to negative for River City Bank and S&T Bank. The agency highlighted that federally insured banks collectively carried unrealized losses on available-for-sale and held-to-maturity securities exceeding $550 billion by the midpoint of the current year.
Why it matters
The credit downgrade presents an additional challenge for individuals and businesses who are already contending with the steepest interest rates in decades for different types of loans, largely due to the Federal Reserve's efforts to counter inflation through rate increases.