One of the world’s leading credit rating agencies, S&P Global, Moody’s and Fitch Ratings, commented on the state of the US sector and the economy. US banking stocks did not sustain gains from the beginning of the session and resumed their lower move, indicating a continuation. Weakness in the US financial sector. Troubled First Republic Bank (FRC.US) is losing more than 4%. The sell-off is also accelerating in shares of Bank of America (BAC.US).
- The maximum amount of debt issued will be 40% higher in 2023 than in 2019. The prediction for the second quarter of 2023 is that bank lending will be slow due to recent tensions and market confidence will change or reveal hidden tensions that trigger renewed volatility;
- Tighter monetary conditions and tighter credit standards could bring many economies closer to hard port.
- Our mindset is for a gentle recession in 2023. At the same time, credit conditions will remain tight and tight. They will cause a slowdown in US economic growth;
- The speed with which the authorities have so far dealt with the banking crisis is only compatible with the most efficient financial development.
- On a case-by-case basis, we see trends in the US banking sector that will offset fiscal costs through slightly weaker growth, but the weakness will be moderate.
- A severe and persistent level of stress in the banking sector, which is not the baseline at this time, could result in a more sustainable decline in economic and fiscal strength.
- We do not expect the events of the past two weeks in the financial sector to have direct negative consequences for the US government;
- We do not expect significant direct fiscal costs derived from the current situation of the banking sector. Despite increased risks in the financial sector, we maintain our positive assessment of the US credit profile.
- However, the fall of the US regional banks led to a higher risk of the credit sector than previously estimated in the credit profile of the sovereign;
- At the same time, unless it highlights the deterioration, the current risk associated with stress in the banking sector is low.
- The proposed rule information to implement the final Basel III rules is expected to be published in the first half of 2023.
- It does not appear that other major regulators are willing to withdraw the permanent AT1’s Credit Suisse bonds before shareholders absorb the full loss.
- Recent turmoil in the banking sector may prompt large US banks to be more closely regulated.
The decline in First Republic Bank (FRC.US) shares in “scaring” Wall Street. Bank buyers still lack shares despite a large discount to the book price, which is now close to 82%. Bank of America ( BAC.US ) also returned to the downside, losing nearly 2%. Source: xStation5
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