Salient to Investors:

Every measure of risk in the credit markets shows the banks enjoy greater confidence among investors now than before Moody’s downgrades.

Richard Bove at Rochdale Securities says Moody’s downgrading the debt of companies that investors want to buy is the most obscene act he’s ever seen by a major institution.

Money managers have limited confidence in the ability of rating firms to determine creditworthiness. For the third time in less than a year, the conclusions of credit-rating companies are being rejected by the global fixed-income market.

Research shows almost half the time, government bond yields fall when a rating action suggests they should climb, or increase when a change signals a decline.

David Trone at JMP Securities said the Moody’s downgrade is another overhyped story of 2012 – the corporate market thinks for itself and credit rating agencies are often lagging indicators.

Paul Miller at FBR Capital Markets said the bank downgrades are all rearview mirror stuff.

James Camp at Eagle Asset Management said the banks never deserved the ratings they had before the 2008 credit crisis.

David Hendler at CreditSights said rating agencies are fighting the last war, and Moody’s did not acknowledge and factor in real balance sheet improvement.

Krishna Memani at OppenheimerFunds said the overall credit quality of U.S. banks is improving.

Gerard Cassidy at RBC Capital Markets said Moody’s is saying “our ratings were wrong three years ago.”

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