Fitch cuts UCBH to junk

Fitch Ratings said it downgraded UCBH Holdings, Inc.'s long-term issuer default rating to BB from BBB, short-term issuer default rating to B from F2, preferred stock to B+ from BBB- and individual rating to C/D from B/C and affirmed the support rating at 5 and support floor at "No Floor."

The agency also downgraded the trust preferred securities of the company's trust subsidiaries to B+ from BBB-.

The ratings were placed on Rating Watch negative.

The agency said the downgrade reflects the magnitude of credit deterioration in UCBH's loan book. While Fitch expected asset quality to weaken given the company's exposure to commercial real estate, the level of deterioration has escalated quickly and exceeded expectations.

The rating action also considers UCBH's weak tangible common equity position relative to its significant exposure to commercial real estate, Fitch said.

Positively, regulatory capital ratios remain above well-capitalized standards, the agency said, although this is largely due to the significant amount of preferred securities in the capital structure.

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