JPMorgan Chase's $20 billion unsecured loan to help AT&T take over T-Mobile could be harmful to consumers by encouraging other risky deals, Moody’s Investors Service said on Monday.
Moody’s called the loan offer a “credit negative,” according to Bloomberg Businessweek.
“JPM’s large AT&T commitment highlights how the risk profile of a capital-markets business can change quickly,” analyst Sean Jones wrote in a research note.
JPMorgan is the only lender involved in the bridge loan to AT&T, which announced earlier this month that it was making a $39 billion cash and stock offer for T-Mobile, currently owned by Deutsche Telekom.
“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,” Jones wrote.
The takeover requires Justice Department and Federal Communications Commission approval. Consumer groups have already weighed in, contending that the deal will lead to higher prices and will hurt consumers in other ways.