Bank of America (NYSE:BAC), Citigroup (NYSE:C), Goldman (NYSE:GS) Credit Ratings Surprise

Financial have enjoyed a resurgence today on the news Standard & Poor’s boosted the credit ratings of Bank of America (NYSE:BAC), Citigroup (NYSE:C) and Goldman Sachs (NYSE:GS).

A couple of things happen with this. One, it's a psychological boost, as it appears most were expecting the credit ratings to be downgraded.

More importantly, it makes the cost of borrowing short term cash less expensive for the banks.

Nomura responded saying, A Sigh of Relief as Potential Downgrades are Avoided, for Now … S&P moved on the ratings sooner than expected (we were thinking some time in 1Q11) and we think the lack of downgrades will be viewed favorably by equity investors. While we think banks and most sophisticated counterparties were reasonably well prepared for potential downgrades, we still think avoiding being downgraded to tier 2 status is a meaningful positive as it keeps funding options open (firms can still issue CP and enter repo transactions with Rule 2a-7 money market funds), keeps funding costs from increasing, and does not make it more costly to compete in certain businesses, like OTC derivatives and prime brokerage."

Citigroup was trading at $4.61, up $0.02, or 0.33 percent, as of 12:35 PM EST. Bank of America was at $12.68, up $0.39, or 3.17 percent. Goldman was at $163.87, down $1.34, or 0.81 percent, falling from earlier in the day when they reached as high as $165.91.