WALL STREET – Moody’s Investors Service yesterday downgraded four corporate credit unions which saw their capital in U.S. Central FCU wiped out by last month’s failure of the central bank for credit unions.
The short-term ratings for the four; Members United Corporate FCU, Central Corporate CU, Corporate Central CU and SunCorp FCU, were lowered to Prime-3 from Prime-1 with developing outlooks because of the elimination of their U.S. Central capital, which "weakened substantially" their standalone credit profiles, as well as because of potential losses in their securities portfolios, according to Moody’s.
The Prime-3 ratings and developing outlooks, said Moody’s, reflect the uncertainty of potential regulatory and/or structural changes to the corporate credit union network, and the risk that such changes may diminish the relevance of these firms upon the restoration of normal market and economic conditions.
The corporates’ downgrades reflect Moody’s recent recalibration of some of the weights of the ratings’ constituent parts. Capital adequacy, in particular, takes on increasing importance in determining standalone ratings in the current environment, the company said.
Yesterday action by Moody’s follows last week’s downgrade of six corporates, including CenCorp and SunCorp, by Standard & Poors, and the downgrade of eight corporates, including Members United, by Fitch Ratings two weeks before.
