Moody's on Dec. 6 raised its long-term ratings, counterparty risk assessments and baseline credit assessment on Bank of America Corp. and some of its subsidiaries.
BofA's long-term issuer rating and senior debt were upgraded to A3 from Baa1, its subordinated debt raised to Baa2 and its preferred noncumulative stock to Ba1(hyb).
The changes also included an upgrade of Bank of America NA's long-term issuer, deposit and senior debt ratings to Aa3 from A1 and of its subordinated debt to A1. Its baseline credit assessment improved to "baa1" from "baa2" and its long-term counterparty risk assessment to Aa3(cr).
Moody's affirmed all short-term ratings and assessments. The outlook is stable.
The upgrades reflect the rating agency's expectation that the North Carolina-based company can sustain recent profitability improvements and that its more conservative risk profile, as seen from the Federal Reserve's stress-test results, will mean less earnings volatility in the future. "Expense-management initiatives are bearing results," and BofA is likely to achieve at least a 1% return on tangible assets, according to the agency.
Should it go beyond that, Moody's said, ratings could be further upgraded.