Thomson BankWatch has lifted the debt ratings of Chase Manhattan Corp. and Citicorp a notch higher than other rating agencies.
The firm, which has the same parent as American Banker, awarded AA ratings to the senior debt of the companies' main banking units, while also lifting the subordinated and short-term debt ratings on the New York money- centers.
"These ratings suggest that at least one outside credit rating company has signaled that these banks have recovered from their problems and are now positioned as extremely strong competitors in the global market," said Sharon Haas, Thomson's Northeastern bank analyst.
A number of cost reduction opportunities have resulted from Chase's merger with Chemical, said Ms. Haas. The company is also a significant player in the credit-card business, she added.
Ms. Haas raised her ratings on Chase Manhattan Corp.'s senior debt to AA-minus from A-plus, subordinated debt to A-plus from A and preferred stock to A from A-minus. She reiterated her rating of TBW-1 for the holding company's short-term debt.
Ms. Haas upgraded Chase Manhattan Bank's senior debt to AA from AA- minus; its subordinated debt to AA-minus from A-plus. She reiterated her short term rating of TBW-1 for the bank unit.
Ms. Haas, who has followed the two banks for 15 years, said that Citicorp's capital ratios once lagged other banks, but the company now has "significant levels of highly liquid assets and nearly unconstrained access to funding sources in virtually all major world markets."
Ms. Haas raised her ratings on Citicorp's senior debt to AA from AA- minus, and on its subordinated debt to AA-minus from A-plus. She reiterated the holding company's short-term debt rating at TBW-1.
She lifted her debt rating on Citicorp's main subsidiary, Citibank, to AA-plus from AA. She affirmed her rating of TBW-1 for Citibank. The short- term debt grade for Citicorp Securities was also reiterated with a rating of TBW-1.
Fitch Investors Service recently placed Chase Manhattan Corp and Citibank on "positive outlook," which implies a raised rating in the future.
"The real hurdle for banks is getting consistent performance across economic cycles and we haven't seen any bear economic cycles in recent history," said Fitch analyst David Martinh.