This article was written by Wendy Tan. It appeared first on the Bloomberg Terminal.
Inflation arrived with a roar in 2021 as pandemic restrictions waned while supply chains remained disrupted. In 2022, exacerbated by energy shortages and Russia’s invasion of Ukraine, inflation reached over 9% in the US and 10% in the European region. Led by the Fed, central banks began raising interest rates at the fastest pace in over four decades.
Banks were affected by these interest-rate changes to varying degrees: At the end of 2022, according to the FDIC, banks had suffered $620 billion in losses on their holdings. So far this year, S&P Global Ratings has downgraded 66 U.S. financial firms — the biggest quarterly cut in at least a decade.
Heightened risk in the banking sector can cause lenders to become more concerned with shoring up their own finances — even without a system-threatening bank collapse. Here’s how to empower your decisions in the midst of banking turmoil by assessing the creditworthiness of institutions on the Bloomberg Terminal:
Type “bloomberg credit monitor” in the command line and select it. The shortcut is DRAM <GO>. Set the Sector amber box to Banking, Region to North America, Ref Date to 30 Days Ago and Market Cap to All. Hit <GO>. Then right click the Chg column heading and select Sort Ascending.
As you can see, three banks saw creditworthiness deteriorate by three levels on the DRSK scale over 30 days, four banks saw a two level deterioration, while most of the 464 issuers saw relative stability.