Bloomberg is reporting today that Bank of America will be downgraded by the bond market following investigations of the bank’s foreclosure processes.
According to Moody’s Corp.’s capital markets research group, prices of the bank’s credit-default swaps imply that the debt was downgraded from its A2 grade to Ba1 as of Wednesday.
The Bloomberg report says that, according to Trace, Bank of America’s $2.5 billion of 4.5 percent notes due in April 2015 fell 1.7 cents to 104.28 cents on the dollar, after being issued at 99.9 cents in March. The bonds were intended to yield 215 basis points more than Treasurys of similar maturity.
Meanwhile, the extra yield investors demand to own company bonds instead of similar maturity government debt rose one basis point in other credit markets to 168 basis points, or 1.68 percentage point, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index.
As of 6:45 p.m. Thursday, the Financial Industry Regulatory Authority’s corporate bond data still shows Bank of America’s bond rating as A2.