Moody’s Dismisses Credit Quality Concerns Amid Worries Of Bad Loans At Regional Banks: Report

Marc Pinto, head of global private credit at Moody’s, reportedly dismissed concerns about credit quality in the U.S. banking system on Friday, stating it is in good shape.

During an interview with CNBC, Pinto stated that there is little evidence of deterioration in the asset quality in the banking system as a whole. “When we dig deeper here and look to see if there’s a turn in the credit cycle, which is effectively what the market seems to be focusing on, we can find no evidence,” Pinto said.

Pinto’s comments come after a selloff in shares of Jefferies Financial Group Inc. (JEF), Western Alliance Bancorp (WAL), and Zions Bancorp NA (ZION) on Thursday. Jefferies had reported earlier this week that it has “limited” exposure to First Brands, an auto parts supplier that declared bankruptcy in September.

“In August, the bank initiated a lawsuit alleging fraud by the borrower in failing to provide collateral loans in first position, among other claims,” Western Alliance said in a filing with the U.S. Securities and Exchange Commission (SEC). At the same time, Zions Bancorp stated that it would take a $50 million charge-off tied to commercial and industrial loans.

Earlier this week, JPMorgan Chase & Co. (JPM) CEO Jamie Dimon spoke about the losses the lender experienced in connection with Tricolor Holdings, while adding that there are “early signs” of excess in corporate lending in the U.S. “When you see one cockroach, there are probably more,” he stated during an analyst call.

However, Pinto dismissed concerns of a wider systemic issue. Reacting to Dimon’s “cockroach” comment, he said, “One cockroach does not a trend make,” according to the report.

“Now that’s what we’re seeing today. That could always change. But if we look at the asset quality numbers that we’ve seen over the last several quarters, we’re seeing very little deterioration at all,” Pinto added.

Meanwhile, U.S. equities were mixed in Friday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.05%, the Invesco QQQ Trust ETF (QQQ) fell 0.2%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 0.24%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.

Also See: Trump Says China ‘Forced’ Him To Levy High Tariffs, But Thinks They Are ‘Not Sustainable’: Report

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