KeyCorp and Comerica Among Five Banks Cut by S&P
Standard & Poor’s (S&P) recently downgraded five banks in the United States, including KeyCorp and Comerica. The downgrades come as part of a wider review of the banking sector, which has been hit hard by the economic fallout of the coronavirus pandemic.
S&P’s Downgrade of KeyCorp and Comerica
S&P downgraded KeyCorp and Comerica from “A-” to “BBB+” on August 21, 2020. The other three banks that were downgraded were U.S. Bancorp, PNC Financial Services Group, and BB&T Corporation. All five banks were downgraded due to their weakened financial positions, which S&P believes will be further weakened by the economic downturn caused by the pandemic.
The downgrades come as part of a wider review of the banking sector by S&P. The ratings agency has been monitoring the sector since the start of the pandemic and has already downgraded several other banks, including Bank of America, Citigroup, and Wells Fargo.
Impact of the Downgrades
The downgrades of KeyCorp and Comerica will have a significant impact on the two banks. The lower ratings will make it more difficult for the banks to access capital markets, as investors are likely to be more wary of investing in banks with lower ratings.
The downgrades will also make it more difficult for the banks to raise capital, as investors may be less willing to invest in banks with lower ratings. This could lead to the banks having to raise capital through other means, such as issuing debt or selling assets.
Reaction to the Downgrades
The downgrades of KeyCorp and Comerica have been met with mixed reactions. Some analysts have argued that the downgrades were necessary, given the weakened financial positions of the two banks. Others have argued that the downgrades were too harsh, given the current economic environment.
Outlook for the Banking Sector
The outlook for the banking sector remains uncertain. The economic fallout from the pandemic is likely to continue to weigh on the sector, and S&P is likely to continue to review the sector and make further downgrades.
However, the sector is also likely to benefit from the economic recovery that is expected to take place over the coming months. This could lead to an improvement in the financial positions of the banks, which could lead to S&P upgrading their ratings.
Conclusion
S&P recently downgraded five banks in the United States, including KeyCorp and Comerica. The downgrades come as part of a wider review of the banking sector, which has been hit hard by the economic fallout of the coronavirus pandemic. The downgrades will have a significant impact on the two banks, making it more difficult for them to access capital markets and raise capital. The outlook for the banking sector remains uncertain, but it is likely to benefit from the economic recovery that is expected to take place over the coming months.