NEW YORK (AP) - Moody’s Investors Service downgraded the senior long-term debt of Merrill Lynch & Co. to “A2″ from “A1″ Thursday to after the world’s largest brokerage posted a $4.9 billion second-quarter loss, hurt by massive write-downs from mortgage-backed securities and other risky investments.
The ratings agency said the company’s financial flexibility is more limited now.
“Management’s options to sell assets or raise more common equity to offset unexpected losses are now reduced given the difficult industry and capital markets environment,” said Peter Nerby, a senior vice president at Moody’s, in a statement.
Standard & Poor’s Ratings Services, meanwhile, affirmed its ratings on Merrill at “A/A-1.” The outlook is negative.
Shares of Merrill Lynch fell $2.02, or 6.6 percent, to $28.71 in after-hours electronic trading. The stock had closed up $2.73, or 9.8 percent, at $30.73 in the regular session.
Tags: assets, capital markets, electronic trading, financial flexibility, investors service, merrill lynch, mortgage backed securities, quarter loss, risky investments, stock, term debt, unexpected losses