S&P downgrades UK bank debt: It's Just a Scratch!
• ftalphaville.ft.com/blog/UK banks with government stakes saw a sharp downgrading of chunks of their debt on Tuesday after S&P concluded the government’s sweeping powers could harm bondholders. The downgrades followed the government’s decision earlier this year to suspend interest payments due on some so-called “tier two” bonds of Bradford & Bingley and Dunfermline, both of which it fully owns. Other countries have not seen their debt downgraded in the same way. On Tuesday S&P downgraded the tier two debt of Northern Rock eight notches to B-minus, while Lloyds Banking Group saw its tier two debt rating cut by three notches. Their share prices stayed steady however as investors knew the changes were coming.
