Lloyds share price is trading lower on the day after Fitch downgraded the bank’s long-term rating from A+ to A.
This downgrade comes as the Fitch rating agency expects the bam;’s consolidated qualifying junior debt buffer to weaken. Fitch says that at 9.4%, the bank’s debt buffer in question will not be built and maintained above 10% of risk-weighted assets.
Lloyds Banking Group had repurchased subordinated debt in 2020, leading to the drop in its risk-weighted asset portfolio at the end of 2020. The news impacted shareholder sentiment on the bank’s stock. Indeed, the bank’s annual investor meeting had to be postponed after a shareholder disrupted proceedings on Thursday.
Lloyds’ share price is trading 0.73% lower and risks posting a lower close for the week.
The recent price action forms a rising wedge on the daily chart. Friday’s decline in the Lloyds share price has violated the 48.125 support line. A second successive closing penetration below this support confirms the breakdown of this price level. It could lead to a correction in price action if the wedge’s lower edge is broken. This corrective move targets 46.615 initially, followed by the 46.00 psychological support (7 May low) and the 44.990 support level.
On the other hand, failure to break down 48.125 and a subsequent bounce targets 49.205, with additional potential targets at 50.00 and 50.435. Attainment of the latter takes Lloyds share price towards levels last seen on 5 March 2020 and also secures new 2021 highs.
