J.P. Morgan's Credit Loan to AT&T Seen as Negative by Moody's (JPM, ATT)
March 29, 2011 6:33 AM
J.P. Morgan Chase's (NYSE: JPM) decision to be the sole underwriter on a $20 billion loan to AT&T (NYSE: ATT) is a "credit negative," according to Moody's Investors Service.
AT&T recently acquired T-Mobile for more than $35 billion. J.P. Morgan is the only bank to provide an unsecured $20 billion one year loan to complete the transaction.
"We believe JPM's $20 billion commitment is credit negative, as it highlights JPM's increased appetite for risk," analyst Sean Jones wrote on Monday.
Shares of J.P. Morgan gained 0.22% Monday, to close at $45.96.
Jones continues, "If this translates into giving the bank an advantage in winning the mandate to underwrite AT&T's long-term bond issuances to pay off the bridge facility, then it may encourage more banks to take on greater single-risk exposure, which would be credit negative for the industry, including JPM."
J.P. Morgan declined to comment.
