Moody's Investor's Service issued a number of ratings releases yesterday, including: "Moody's downgrades Bank of America Corp. to Baa1/P-2; Bank of America N.A. to A2, P-1 affirmed," "Moody's downgrades Citigroup Inc to P-2; Citibank Prime-1 affirmed; all long-term senior ratings confirmed," and "Moody's downgrades Wells Fargo & Company rating (sr to A2); P-1 affirmed." The first release says, "Moody's Investors Service has downgraded the ratings of Bank of America Corporation's (BAC) holding company to Baa1 from A2 for long-term senior debt and to Prime-2 from Prime-1 for short-term debt. The long-term deposit ratings of Bank of America N.A. (BANA) were downgraded to A2 from Aa3, while BANA's short-term rating was affirmed at Prime-1. The actions conclude a review for downgrade announced on June 2, 2011. The outlook on the long-term senior ratings remains negative." (Note that Crane Data's latest Money Fund Portfolio Holdings show that BANA is a much larger issuer in the short-term market, accounting for over 63% of the total BofA issuance.) The Citi release says, "`Moody's Investors Service confirmed the A3 long-term rating of Citigroup and the A1 long-term and Prime-1 short-term ratings of Citibank N.A. At the same time, Moody's downgraded the short-term rating of Citigroup (the holding company) to Prime-2 from Prime-1." While these moves shouldn't have a dramatic impact on funds due to their partial nature (the banks can shift issuance to the top-rated portion), we will examine this in more detail in coming days.

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