J.P Morgan & Co. and its subsidiary bank, Morgan Guaranty Trust Co., may be facing downgrades from the nation's top rating agencies as the company's troubles with Southeast Asia become more evident, market experts said.

J.P. Morgan's disappointing fourth-quarter earnings, due primarily to its exposure to Southeast Asia, could prompt action, analysts said.

"Ratings agencies may have more of an issue with earnings volatility and emerging markets-related credit quality," bank bond analyst Eric J. Grubelich of Keefe Bruyette & Woods Inc. said in a report on Tuesday. Since the company "has a negative outlook from S&P and Moody's, these issues, on top of capital leverage issues, could result in a negative watchlisting for the company."

If Standard & Poor's were contemplating dropping Morgan to "watch list negative"-the next step down in rating-it would probably do it in the next month, Mr. Grubelich said.

Standard & Poor's has an AAA rating on Morgan Guaranty and an AA rating on its holding company, making it the highest-rated bank in the country. Moody's has an Aa1 on the bank and an Aa2 on the holding company.Market experts noted that Standard & Poor's is likely to be the first of the agencies to downgrade, because many believe that the company's AAA rating is inflated. To many, Moody's rating seem to be more in line.

"The risk profile of this company changed a number of years ago," said bank bond analyst Van Hesser at Goldman Sachs & Co. "Yet the agencies haven't kept up with the changes in their business. Commercial banks that have tried to buy into the investment banking business have been having problems."

Mr. Hesser, who said he has been bearish on the company for two years, said Goldman Sachs views J.P Morgan "as a low double-A bank."

"We wouldn't be surprised if both agencies downgrade the company," Mr. Hesser said. "There is plenty of room for it."

Bank bond analyst Katharine Rossow of Chase Securities Inc. agreed.

"J.P Morgan has a highly recognized and extremely well respected name. However, its business lines are more similar to an investment bank, and investment banking is not a AAA-rated industry," said Ms. Rossow.

Indeed. The top investment banks-Goldman Sachs; Merrill Lynch & Co.; and Morgan Stanley, Dean Witter, Discover & Co.-are rated lower than J.P. Morgan, which to some in the market is more an investment bank than a commercial one.

A year ago, J.P. Morgan's debt traded at tighter spreads than other money-center bank debt because of its high ratings.

In recent weeks, spreads on Morgan's 10-year subordinated debt have been wider than Chase's and Citicorp's, meaning "the market has priced the debt as if it were to be downgraded," Ms. Rossow said.

Traders noted that since the trouble in Southeast Asia began, spreads on the company's bonds have widened by 20 basis points.

Ratings analyst Tanya Azarchs, who covers the company at Standard & Poor's, declined to say whether the agency is ready to take J.P. Morgan down a notch in ratings.

However, she did point out that the trends that have led the agency to put the company on "negative outlook" a year ago are still in place.

The most troubling trends include J.P Morgan's deteriorating capital ratios caused by share buybacks, and additional goodwill brought on by its stake in mutual fund American Century. The company's expenses are also growing more rapidly than its revenues, Ms. Azarchs said. Its disappointing fourth-quarter earnings "just added one more thing to the list."

Moody's officials declined to comment

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