Moody's Honors Wells Fargo’s Capital Raise

Moody's Investors Service upgraded Wells Fargo & Co.’s (WFC) preferred stock rating by two notches on Thursday, saying that the bank's financial flexibility had improved after an $8.6 billion stock sale.

The San Francisco, California-based firm had to raise capital by selling shares after the government’s stress tests indicated that it required $13.7 billion to buffer itself against potential near-term losses. Federal regulators determined that Wells Fargo’s requirement was second only to Bank of America (BAC) among the 10 large banks that had been asked to plug their capital holes.

The credit ratings agency boosted Wells Fargo’s preferred stock to Ba3 from B2 and said the bank’s current capital position reduces the threat of a dividend cut. Moody's had slashed this rating by nine notches last March on concerns regarding Wells Fargo’s short-term capital ratio.

Shares of Wells Fargo jumped 5.74% to an intraday high of $25.59 at noon on the New York Stock Exchange.

Read the full analyst report on WFC