Citigroup Inc. which has worked its way up to become one of stock analysts' top-rated companies, now seems to be in line for a debt upgrade.

Citi is under review for a possible upgrade by Moody's Investors Service, and some observers predict that it could be up for an Aaa, the agency's top rating. Last week Peter E. Nerby, a Moody's analyst, wrote a research note where he commended Citigroup's creation of an "extensive global platform of distribution and a well-recognized brand name." In an interview Thursday, Mr. Nerby said that a number of factors, including economies of scale, cross-selling opportunities, and diversification made Citi "a unique player."

Moody's now rates Citigroup as Aa2. That is two notches below Aaa, the rating The Wall Street Journal reported Thursday that Citi might receive. But Mr. Nerby said it would be "highly unusual" for Moody's to upgrade companies two notches.

He said the decision will come within three months.

Equity analysts consistently applaud Citi's diversification, but Mr. Nerby, who covers broker-dealers for Moody's, said that diversification alone would not get Citi the top grade. He said that all subsidiaries, which are rated separately from the holding company and mostly warrant an Aa3 rating, must be on their best behavior for Citigroup to move on to the next level.

Mr. Nerby said Citi's Salomon Smith Barney has some wood to chop to match Goldman, Sachs & Co. and Morgan Stanley Dean Witter & Co. in equity underwriting and M&A - even though Salomon's strong focus on fixed income may have helped it weather the equity market slump.

However, even though Moody's analysts are not usually bullish about mergers and acquisitions in the banking industry, because they dilute a company's financial strength, Citigroup's pending acquisition of Mexico's Grupo Financiero Banamex-Accival SA looks like a good move, Mr. Nerby said. He added that Citigroup is "arguably in the position to be able to buy terrific companies" without damaging its franchise.

On Thursday, Banamex reported second-quarter profits of 4 cents a share, up 40% but short of the 5 cents analysts had expected, according to a poll by Reuters.

In holding the Aa2 rating, Citi is up there with some less diversified banking companies, among them Bank of America Corp. Moody's analyst Rosemarie Conforte, who covers Bank of America, wrote in her note on Tuesday that its strong earnings provide a cushion against possible problems.

Eric Grubelich, the chief credit analyst at Keefe, Bruyette & Woods Inc., agreed that Bank of America's earnings could absorb a lot of problems. He said, however, that in upgrading Citi, Moody's would distinguish between financial companies with strong earnings and those with a lower risk than others with Aa2 ratings.

David Berry, the director of equity research at Keefe Bruyette, said an Aaa rating might not be efficient for Citi, which to win it would have to tie up capital to reduce its risk profile.

And Mr. Grubelich speculated that the next rating for Citi is likely to be a Aa1. But he added that if any company involved in commercial banking would make it to the top rating, it would be Citi.

Others are more confident that Citi's unique qualities will be awarded a triple A. "I think it's going to happen," said David Handler, who covers Citi's debt as well as its equity for Credit Sights, an independent research company in New York. He added that he would consider an upgrade as a vote of confidence for "the Citi story."

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