Bank of America (BAC) Debt Rating Slashed

Probably a case of 20/20 hindsight but Fitch cut its Issuer Default Rating (IDR) for Bank of America (BAC) to A+ from AA-, its 5th highest investment grade rating.

Fitch cited expected consumer weakness due to a deteriorating economic environment and BAC’s exposure to home equity:

Fitch’s rating actions reflect continuing headwinds from mark-to-market valuations on various asset classes in BANA’s capital market units as well as headwinds facing its consumer and potentially its commercial credit portfolio. Fitch expects the headwinds from asset valuations to decline going forward since these positions have been substantially reduced through writedowns and other mitigation efforts… The primary point of pressure to date has been BAC’s sizeable home equity loan portfolio with significant exposure to the most problematic U.S. housing markets, including California and Florida.

Fitch maintains that BAC’s future ratings outlook remains “stable.”

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