Moody's downgrades WaMu

Moody's Investors Service said it downgraded Washington Mutual, Inc.'s senior unsecured bond rating to Baa3 from Baa2, subordinated bond and senior subordinated bond ratings to Ba1 from Baa3 and preferred stock rating to Ba2 from Ba1. The Prime-2 short-term rating was affirmed.

The agency also downgraded the subordinated bonds of Bank United to Baa3 from Baa2; the senior unsecured convertible bonds of Providian Financial Corp. to Ba1 from Baa3; Washington Mutual Bank's issuer rating, senior unsecured OSO rating and senior unsecured bonds to Baa2 from Baa1 and its subordinated bonds to Baa3 from Baa2; the preferred stock of Great Western Financial Trust II, Providian Capital I, Washington Mutual Capital I and Washington Mutual Capital Trust 2001 to Ba1 from Baa3; and the preferred stock of Washington Mutual Pfd Funding (Cayman) I Ltd. and Washington Mutual Preferred Funding Trust I-IV to Ba2 from Ba1.

The outlook was changed to negative from stable.

The agency said the downgrade reflects the rapid deterioration of the residential housing sector in the first quarter of 2008 and the resulting increase in expected provisioning needs on WaMu's residential mortgage loan portfolio. Moody's believes that remaining lifetime losses on this portfolio will be higher than previously expected, that WaMu's required provisioning is likely to be greater than $12 billion and that full-year 2008 net losses could eliminate the company's approximately $6 billion capital cushion above regulatory well capitalized minimums.

Moody's noted that WaMu maintains a strong liquidity position through its core deposit franchise, Federal Home Loan Bank access and limited holding company debt maturities in 2008 and 2009.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.