Megabanks Brace for Downgrades

Mortgage & Real Estate

A new wave of credit downgrades on the nation’s megabanks could hit the market this week, causing nervousness among investors.

Moody’s Investors Service said it is likely to reduce by the end of June credit ratings for 17 large global banks, including five of the six biggest U.S. financial firms by assets.

The downgrades are expected to raise borrowing costs and crimp certain business lines at JPMorgan Chase, Bank of America and Citigroup—all of which are top players in residential finance.

Downgrades may also come on Goldman Sachs and Morgan Stanley.

The ratings action has been in the works since February, when Moody said it would review the credit ratings of more than 100 banks around the world because of pressures on bank profits.

Those threats include uneven economic growth, nervous financial markets and tighter regulations.

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