Salomon Inc. Downgraded
Moody's Investors Service has reduced its ratings of Salomon Inc.
The credit rating agency cited possible business consequences arising from the firm's admitted wrongdoing in recent Treasury auctions by its Salomon Brothers subsidiary.
A Rating of P-2
Included in the downgrades was a cut in Salomon's commercial paper rating to P-2 from P-1.
Such a cut will make it much harder for mutual funds to purchase Salomon's commercial paper because of new Securities and Exchange Commission restrictions on how much second-tier commercial paper mutual funds can own.
Review Under Way
Standard & Poor's Corp. currently rates Salomon's commercial paper A-1, but that designation is under review for a possible cut.