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Morgan Stanley Rallies as Bank Avoids Three-Level Downgrade

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Morgan Stanley CEO James Gorman
James Gorman, chairman and chief executive officer of Morgan Stanley. Photographer: Peter Foley/Bloomberg

June 21 (Bloomberg) -- Morgan Stanley, owner of the world’s largest brokerage, rallied in extended trading as the bank was downgraded two levels by Moody’s Investors Service rather than the three-grade cut that the ratings firm said was possible.

The bank climbed 4.6 percent to $14.60 at 5:24 p.m. in New York.

Moody’s had said it may reduce the rating on the New York-based firm by as many as three levels as part of an industrywide review. Morgan Stanley can manage through any potential cut, Chief Executive Officer James Gorman said June 12 at an investor conference in New York.

Donald Jones, a Sterne Agee & Leach Inc. analyst, said in a June 19 note that the most likely outcome expected by bond investors was a three-grade rating cut.

To contact the reporter on this story: Laura Marcinek in New York at Lmarcinek3@bloomberg.net; Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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