New York, December 06, 2017 -- Moody's Investors Service has upgraded the long-term ratings,
counterparty risk assessments, and baseline credit assessment of
Bank of America Corporation (BAC, senior debt to A3 from Baa1) and
certain subsidiaries, including its principal bank subsidiary,
Bank of America N.A. (BANA, deposits and senior debt
to Aa3 from A1, BCA to baa1 from baa2). Moody's also
affirmed all the short-term ratings and assessments at BAC and
its rated subsidiaries. The rating outlook is stable. A
complete list of affected ratings and entities can be found at the end
of this press release.
RATINGS RATIONALE
The rating action is driven by the recent and expected future improvements
to BAC's profitability, which Moody's expects will be
sustained, and by the commitment of BAC's management and its
board of directors to a conservative risk profile, which Moody's
expects will reduce the bank's earnings volatility going forward,
a positive for the bank's creditors.
Moody's noted that BAC's profitability has improved steadily
over the last three years. The earnings drag from BAC's legacy
mortgage servicing and litigation matters has receded, and the bank's
expense-management initiatives are bearing results. Higher
interest rates have also provided a boost to earnings at BAC, which
continues to have the most asset-sensitive balance sheet among
its rated US peers. The rating agency anticipates that additional
rate hikes as well as the realization of the bank's $53 billion
cost target in 2018 will further boost BAC's profitability to at
least a 1% return on tangible assets. This is likely even
as the proportion of rate hikes which are passed through to depositors
increases, i.e., as the bank experiences higher
deposit betas.
During and for several years following the financial crisis BAC experienced
significant earnings volatility, driven by high credit costs,
trading losses, and litigation and restructuring charges.
These costs were reflective of the bank's and its acquirees'
aggressive risk appetites leading up to the financial crisis. However,
over the past six years the bank has adopted a more conservative risk
appetite than many of its peers, in addition to significantly bolstering
its risk management, governance and controls. Evidence of
BAC's more conservative risk profile includes the greater resiliency
of its performance under the Federal Reserve's severely adverse
stress tests, the bank's more cautious approach to loan growth
than many of its peers in the context of low nominal US GDP growth,
and constraints on the size of its capital markets business. This
approach is firmly supported by BAC's management and its board of
directors and is reinforced across all areas of the firm through ongoing
analytics, training, and feedback. As such, Moody's
believes this more conservative risk profile is unlikely to be reversed.
Moody's also noted that BAC's credit profile has been strengthened
by recent improvements to its capital position. BAC's capital
payouts have been more conservative than peers over the last few years,
allowing the firm to build capital. However, Moody's
expects BAC's payouts to shareholders to increase going forward,
subject to Federal Reserve approval. Higher payouts are likely
to result in some deterioration in BAC's capital position,
but Moody's expects the bank's ratio of tangible common equity
to risk-weighted assets will remain above 11% and its ratio
of tangible common equity to tangible assets will remain above 7.5%.
BAC has a robust liquidity profile and is less reliant on wholesale funding
than many of its peers. This remains a key credit strength,
and the upgrade incorporates Moody's expectation that the bank's
strong liquidity metrics will hold steady at current levels.
WHAT COULD MOVE THE RATINGS UP/DOWN
BAC's ratings could be upgraded if the bank were to generate profitability
greater than a 1.0% return on tangible assets on a sustainable
basis, with a lower level of earnings volatility than similarly
rated peers and without materially reducing its liquidity or capital ratios.
A key component of this will be maintenance of a conservative risk profile
and an absence of major litigation or other sizeable operational risk
charges or control failures.
BAC's ratings could be downgraded if the bank experiences a significant
deterioration in its capital or liquidity levels, demonstrates a
marked increase in its risk appetite, or experiences a major litigation
or other sizeable operational risk charge or control failure.
The following ratings are being upgraded:
Issuer: B of A Issuance B.V.
....Senior Unsecured Regular Bond/Debenture,
Upgraded to A3/STA
Issuer: BA Australia Limited
....Senior Unsecured Medium-Term Note
Program, Upgraded to (P)Aa3
Issuer: BAC AAH Capital Funding LLC I
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC II
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC III
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC IV
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC IX
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC V
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC VI
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC VII
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC X
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC XI
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC XII
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC AAH Capital Funding LLC XIII
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC Canada Finance Company
....Senior Unsecured Regular Bond/Debenture,
Upgraded to A3/STA
....Senior Unsecured Medium-Term Note
Program, Upgraded to (P)A3
....Subordinate Medium-Term Note Program,
Upgraded to (P)Baa2
....Senior Unsecured Shelf, Upgraded
to (P)A3
Issuer: BAC Capital Trust VI
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: BAC Capital Trust VII
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: BAC Capital Trust XI
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: BAC Capital Trust XIII
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC Capital Trust XIV
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: BAC Capital Trust XV
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: BAC North America Holding Company
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
Issuer: Bank of America Corporation
....Long-Term Issuer Rating,
Upgraded to A3/STA
....Senior Unsecured Regular Bond/Debenture,
Upgraded to A3/STA
....Senior Subordinated Regular Bond/Debenture,
Upgraded to Baa2
....Subordinate Regular Bond/Debenture,
Upgraded to Baa2
....Pref. Stock Non-Cumulative,
Upgraded to Ba1(hyb)
....Senior Unsecured Medium-Term Note
Program, Upgraded to (P)A3
....Subordinate Medium-Term Note Program,
Upgraded to (P)Baa2
....Senior Unsecured Shelf, Upgraded
to (P)A3
....Subordinate Shelf, Upgraded to (P)Baa2
....Preferred Shelf, Upgraded to (P)Baa3
....Pref. Shelf Non-Cumulative,
Upgraded to (P)Ba1
Issuer: Bank of America, N.A.
....Baseline Credit Assessment, Upgraded
to baa1
....Adjusted Baseline Credit Assessment,
Upgraded to baa1
....Long-Term Counterparty Risk Assessment,
Upgraded to Aa3(cr)
....Long-Term Issuer Rating,
Upgraded to Aa3/STA
....Long-Term Bank Deposit Rating,
Upgraded to Aa3/STA
....Senior Unsecured Regular Bond/Debenture,
Upgraded to Aa3/STA
....Subordinate Regular Bond/Debenture,
Upgraded to A1
....Senior Unsecured Bank Note Program,
Upgraded to (P)Aa3
....Subordinate Bank Note Program, Upgraded
to (P)A1
Issuer: Bank of America, N.A. (Sydney Branch)
....Long-Term Counterparty Risk Assessment,
Upgraded to Aa3(cr)
....Senior Unsecured Regular Bond/Debenture,
Upgraded to Aa3/STA
....Senior Unsecured Medium-Term Note
Program, Upgraded to (P)Aa3
....Subordinate Medium-Term Note Program,
Upgraded to (P)A1
Issuer: Bank of America, N.A., London
Branch
....Long-Term Counterparty Risk Assessment,
Upgraded to Aa3(cr)
....Senior Unsecured Deposit Program,
Upgraded to (P)Aa3
Issuer: BankAmerica Capital III
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: BankBoston Capital Trust III
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: BankBoston Capital Trust IV
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: BofA Finance LLC
....Senior Unsecured Regular Bond/Debenture,
Upgraded to A3/STA
....Senior Unsecured Medium-Term Note
Program, Upgraded to (P)A3
....Senior Unsecured Shelf, Upgraded
to (P)A3
Issuer: Countrywide Capital III
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: Countrywide Capital V
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: Fleet Capital Trust V
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: FleetBoston Financial Corporation
....Subordinate Regular Bond/Debenture,
Upgraded to Baa2
Issuer: LaSalle Bank N.A.
....Senior Unsecured Deposit Note/Takedown,
Upgraded to Aa3/STA
Issuer: LaSalle Funding LLC
....Senior Unsecured Regular Bond/Debenture,
Upgraded to A3/STA
....Senior Unsecured Medium-Term Note
Program, Upgraded to (P)A3
....Senior Unsecured Shelf, Upgraded
to (P)A3
....Subordinate Shelf, Upgraded to (P)Baa2
Issuer: MBNA Capital B
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: Merrill Lynch & Co., Inc.
....Senior Unsecured Regular Bond/Debenture,
Upgraded to A3/STA
....Senior Unsecured Conv./Exch.
Bond/Debenture, Upgraded to A3/STA
....Subordinate Regular Bond/Debenture,
Upgraded to Baa2
Issuer: Merrill Lynch Capital Trust I
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: Merrill Lynch Capital Trust III
....Preferred Stock, Upgraded to Baa3(hyb)
Issuer: Merrill Lynch International & Co. C.V.
....Senior Unsecured Medium-Term Note
Program, Upgraded to (P)A3
Issuer: Merrill Lynch Japan Finance GK
....Senior Unsecured Medium-Term Note
Program, Upgraded to (P)A3
Issuer: Merrill Lynch Preferred Capital Trust IV
....Preferred Shelf, Upgraded to (P)Baa3
Issuer: Merrill Lynch Preferred Funding IV, L.P.
....Preferred Shelf, Upgraded to (P)Baa3
Issuer: Merrill Lynch Preferred Funding V, L.P.
....Preferred Shelf, Upgraded to (P)Baa3
Issuer: Merrill Lynch S.A.
....Senior Unsecured Regular Bond/Debenture,
Upgraded to A3/STA
Issuer: NB Capital Trust III
....Preferred Stock, Upgraded to Baa3(hyb)
The following ratings are being affirmed:
Issuer: BA Australia Limited
....Short-Term Medium-Term Note
Program, at (P)P-1
Issuer: Bank of America Corporation
....Commercial Paper, at P-2
....Short-Term Medium-Term Note
Program, at (P)P-2
Issuer: Bank of America, N.A.
....Short-Term Counterparty Risk Assessment,
at P-1(cr)
....Short-Term Bank Deposit Rating,
at P-1
....Senior Unsecured Commercial Paper,
at P-1
....Short-Term Bank Note Program,
at (P)P-1
Issuer: Bank of America, N.A. (Sydney Branch)
....Counterparty Risk Assessment, at
P-1(cr)
....Commercial Paper, at P-1
Issuer: Bank of America, N.A., London
Branch
....Short-Term Counterparty Risk Assessment,
at P-1(cr)
....Commercial Paper, at P-1
....Short-Term Deposit Program,
at (P)P-1
Issuer: Merrill Lynch International & Co. C.V.
....Short-Term Medium-Term Note
Program, at (P)P-2
Issuer: Merrill Lynch Japan Finance GK
....Short-Term Medium-Term Note
Program, at (P)P-2
Outlook Actions:
Issuer: B of A Issuance B.V.
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BA Australia Limited
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC I
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC II
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC III
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC IV
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC IX
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC V
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC VI
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC VII
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC X
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC XI
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC XII
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC AAH Capital Funding LLC XIII
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC Canada Finance Company
....Outlook, Changed To Stable From
Rating Under Review
Issuer: BAC Capital Trust VI
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC Capital Trust VII
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC Capital Trust XI
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC Capital Trust XIII
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC Capital Trust XIV
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC Capital Trust XV
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BAC North America Holding Company
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Bank of America Corporation
....Outlook, Changed To Stable From
Rating Under Review
Issuer: Bank of America, N.A.
....Outlook, Changed To Stable From
Rating Under Review
Issuer: Bank of America, N.A. (Sydney Branch)
....Outlook, Changed To Stable From
Rating Under Review
Issuer: Bank of America, N.A., London
Branch
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BankAmerica Capital III
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BankBoston Capital Trust III
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BankBoston Capital Trust IV
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: BofA Finance LLC
....Outlook, Changed To Stable From
Rating Under Review
Issuer: Countrywide Capital III
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Countrywide Capital V
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Fleet Capital Trust V
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: FleetBoston Financial Corporation
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: LaSalle Bank N.A.
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: LaSalle Funding LLC
....Outlook, Changed To Stable From
Rating Under Review
Issuer: MBNA Capital B
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Merrill Lynch & Co., Inc.
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Merrill Lynch Capital Trust I
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Merrill Lynch Capital Trust III
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Merrill Lynch International & Co. C.V.
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Merrill Lynch Japan Finance GK
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Merrill Lynch Preferred Capital Trust IV
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Merrill Lynch Preferred Funding IV, L.P.
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Merrill Lynch Preferred Funding V, L.P.
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: Merrill Lynch S.A.
....Outlook, Changed To No Outlook From
Rating Under Review
Issuer: NB Capital Trust III
....Outlook, Changed To No Outlook From
Rating Under Review
The principal methodology used in these ratings was Banks published in
September 2017. Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
David Fanger
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Ana Arsov
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
