Moody's downgrades BNP Paribas credit rating
NEW YORK (AP) — Moody's Investors Service lowered its rating on BNP Paribas Thursday along with its credit ratings on some of the largest banks in the world.
Moody's said the banks are exposed to volatility and potential large risks that are associated with capital markets. It said capital markets operations are a fairly large part of the French bank's business compared to some of its competitors, and it relies on capital markets revenue to meet shareholder expectations. However it also said BNP Paribas has some other strong businesses that can act as "shock absorbers" and blunt the risks of capital markets losses.
The firm added that BNP Paribas has significant exposure to weak economies in Europe.
It downgraded the bank by two notches, to 'A2' from 'Aa3'. The new rating is five notches above "junk" status. Moody's said its outlook is stable.
Downgrades mean Moody's sees greater risks in a company's debt, and they usually make it more costly for banks to raise money by selling debt because investors demand higher interest in return for taking on greater debt.
Other banks downgraded Thursday included Bank of America, JPMorgan Chase, Citigroup and Goldman Sachs. Moody's had said in February that it might downgrade the credit ratings of some major banks.