Press Release Source: Fitch Ratings
Fitch Downgrades Citigroup's Individual and Preferred Ratings; Affirms 'A+' IDR
Friday February 6, 2009, 10:04 am EST
NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded the following ratings for Citigroup Inc. (Citi):
--Individual to 'C/D' from 'C'
--Preferred to 'BB' from 'BBB'.
These ratings are on Rating Watch Negative by Fitch. At the same time, Fitch has affirmed Citi's Long-term and Short-term Issuer Default Ratings (IDRs) of 'A+' and 'F1+', respectively, given Citi's systemic importance and the magnitude of support measures from the U.S. government. The Outlook for the Long-term IDR remains Stable. A list of Citigroup entities affected by rating changes is listed below.
Fitch's downgrade of Citi's Individual Rating reflects current and expected financial performance challenges. Citi recorded massive losses in fourth quarter-2008 (4Q'08) and faces the prospect of surging asset quality problems globally. Fitch recognizes Citi's efforts in building up its loan loss reserves and reducing problematic exposures across many different categories (including subprime ABS CDOs, Alt-A securities, leveraged finance, CMBS, monolines, and SIVs, among others). Nevertheless, global economic difficulties are causing the inflow of new problems ranging from U.S. and international consumer exposures to large corporate exposures. Consequently, provisioning needs are expected to remain quite elevated for 2009. The U.S. government's loss cap guarantee reduces the long tail risk on a U.S. portfolio of approximately $300 billion. That said, Citi's first loss exposure of $30 billion (above existing reserves) remains sizeable.
In addition to performance challenges, the following factors drove Fitch's decision to downgrade the Preferred Rating:
--a very high level of preferred in the capital structure; -- large servicing costs on preferred;
--the potential for the deferral to conserve capital.
Following the U.S. government capital injections, preferred and trust preferred instruments now total over $100 billion versus tangible common equity of $29 billion at year-end 2008. The cost associated with preferred and trust preferred is considerably higher in 2009 when compared to 2008. Quarterly costs associated with preferred and trust preferred instruments now total $1.8 billion including the new government preferred issues. When combined with a weak performance outlook, the magnitude of these ongoing costs raises the probability for deferral. (Please see commentary: Fitch Sees Elevated Risk of Bank Hybrid Capital Coupon Deferral in 2009 dated Feb. 4, 2009 available on Fitch's web site at www.fitchratings.com).The Individual Rating and Preferred Ratings could face incremental pressure depending on the scope of future losses by Citi. On the other hand, a return to profitability and positive internal capital generation are key factors towards stabilizing Citi's Individual and Preferred Ratings.
Citigroup Inc.
--Long-term IDR affirmed at 'A+'; Outlook Stable;
--Short-term IDR affirmed at 'F1+';
--Senior unsecured affirmed at 'A+';
--Subordinated affirmed at 'A';
--Support affirmed at '1';
--Support Floor affirmed at 'A+';
--Individual downgraded to 'C/D' from 'C'; on Rating Watch Negative;
--Preferred to 'BB' from 'BBB'; remains on Rating Watch Negative;
--Long-term FDIC guaranteed debt affirmed at 'AAA';
--Short-term FDIC guaranteed debt affirmed at 'F1+'.
Citibank, N.A.
--Long-term IDR affirmed at 'A+'; Outlook Stable;
--Short-term IDR affirmed at 'F1+';
--Long term deposits affirmed at 'AA-';
--Short-term deposits affirmed at 'F1+';
--Support affirmed at '1';
--Support Floor affirmed at 'A+';
--Individual downgraded to 'C/D' from 'C'; on Rating Watch Negative.
Citibank (South Dakota)
--Long-term IDR affirmed at 'A+'; Outlook Stable;
--Short-term IDR affirmed at 'F1+';
--Long-term deposits affirmed at 'AA-';
--Short-term deposits affirmed at 'F1+';
--Support affirmed at '1';
--Support Floor affirmed at 'A+';
--Individual downgraded to 'C/D' from 'C'; on Rating Watch Negative.
Citibank Banamex USA
--Long-term IDR affirmed at 'A+'; Outlook Stable;
--Short-term IDR affirmed at 'F1+';
--Subordinated affirmed at 'A';
--Long-term deposits affirmed at 'AA-';
--Short-term deposits affirmed at 'F1+';
--Support affirmed at '1';
--Support Floor affirmed at 'A+';
--Individual downgraded to 'C/D' from 'C'; on Rating Watch Negative.
Citigroup Capital III, IV, V, VI, VII, VIII, IX, X, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXIX, XXX, XXXI, and XXXII
--Preferred downgraded to 'BB' from 'BBB'; remains on Rating Watch Negative.
Adam Capital Trust II, III, Adam Statutory Trust I-V
--Preferred downgraded to 'BB' from 'BBB'; remains on Rating Watch Negative.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Contact:
Fitch Ratings
Joe Scott, +1-212-908-0624 (New York)
Eileen Fahey, CFA, +1-312-368-5468 (Chicago)
Media Relations
Tyrene Frederick-Mack, +1-212-908-0540 (New York)
tyrene.frederick-mack@fitchratings.com
What You Will Find Here
- OJOS11
- Articles and news of general interest about investing, saving, personal finance, retirement, insurance, saving on taxes, college funding, financial literacy, estate planning, consumer education, long term care, financial services, help for seniors and business owners.
READING LIST
-
▼
2009
(202)
-
▼
February
(11)
- from Wired Magazine - The Formula that Sank Wall St
- from Business Insider - the 25 most valuable blogs
- How to Complain to a Company (from WSJ)
- from ZeroHedge.com: When Government Intervenes in ...
- Financial Times: GM deadline nears
- Fitch downgrades Royal Bank of Scotland
- Citi ratings downgraded by Fitch
- Warning on Hybrid PreferredStocks - Financials (Fi...
- WSJ - optimize your Search Engine Optimization Res...
- The Best Financial Blogs (from 24/7 Wall Street )
- GM and Chrysler Plan Due on Feb 17 (Assoc Press)
-
▼
February
(11)
Blog List
-
-
The EU Is Spending Billions on Hydrogen-Ready, But Where’s the Hydrogen? - I'm all in favor of hydrogen-powered plants to produce electricity if only we had cheap hydrogen. But we don't and likely won't.
-
How Companies Dodge Tariffs - Protectionist trade policies are popular on both the left and right. But some economists say they’re likely to backfire.
-
Neom wants to build a 1,500-foot infinity pool that's almost 4 times longer than one in Dubai - The pool planned for the Treyam region of Saudi Arabia's Neom megaproject will be 1,500 feet long and suspended 220 feet above the sea if completed.
-
Everybody Else Is Reading This - Snowflakes That Stay On My Nose And Eyelashes Above The Law Trump’s New Birth Control […]
-
Maximizing Employer Stock Options - Oct 29 – On this edition of Lifetime Income, Paul Horn and Chris Preitauer discuss the benefits of employee stock options and how to best benefit from th...
-
Wayfair Needs to Prove This Isn't as Good as It Gets - Earnings were encouraging, but questions remain about the online retailer's long-term viability.
-
Hannity Promises To Expose CNN & NBC News In "EpicFail" - *"Tick tock."* In a mysterious tweet yesterday evening to his *3.19 million followers,* Fox News' Sean Hannity offered a preview of what is to come from ...
-
Don’t Forget These Important Retirement Deadlines - *Now that fall is in full swing, be sure to mark your calendar for steps that can help boost your tax-advantage retirement savings.*