The gap between Moody's Investors Service and Standard & Poor's ratings on some of the largest domestic banks appears to be closing, with major banks such as Bank of America and Wachovia among others on positive outlook from S&P. Moody's rates BofA's senior paper Aa2, two notches higher than S&P's single-A plus; Wachovia is at Aa3, which is also two levels above single-A.
David Hendler, senior analyst in financial services at CreditSights, said the discrepancies in bank ratings, which have become more pronounced in the last couple of years since the Enron and WorldCom disasters, are likely to narrow. "Moody's has viewed the banking industry as stronger than ever before, while S&P looks more at each company's track record and earnings sustainability," explained Hendler, noting he is more in S&P's camp.