MOODY'S ASSIGNS COUNTERPARTY RATINGS TO U.S. BANK HOLDING COMPANIES
New York, 06-20-95 -- Moody's Investors Service assigned Counterparty ratings to 23 U.S. bank holding companies. This follows the assignment (in April 1994) of Counterparty ratings to about 300 U.S. banks, which remain the booking location for the vast majority of derivatives contracts within consolidated banking organizations. However, bank holding companies also routinely enter into derivatives transactions, primarily as end-users in connection with parent company and group funding activities, and to manage foreign currency risk exposures.
Moody's said that the Counterparty ratings assigned to the 23 holding companies are in all cases at the same level as their senior debt ratings. This reflects Moody's opinion of the relative standing and loss content of derivatives claims at the parent company level as compared to debt claims. In most instances (putting aside the possibility that legal or other matters specific to a particular entity could affect the legal standing of derivatives), Moody's believes that derivatives claims against a bankrupt obligor should rank pari passu with the senior unsecured claims of bondholders against the same obligor under the U.S. Bankruptcy Code.
Moody's stated that it is continuing its review of other legal entities within bank holding company families that participate in the derivatives markets in the U.S. and abroad. The rating agency noted that there may be important differentials between the credit risk of a specific derivatives counterparty and that of other entities within the same corporate group which could affect the credit status of different classes of claimants. For example, Counterparty credit risk can be affected by transfer risk depending on the legal domicile of the specific entity, or by different legal treatment in a receivership. Further, a weaker and unguaranteed subsidiary may not enjoy the full support of its parent in a stress situation. Moody's intends over time to expand its universe of Counterparty ratings to nonbank and foreign bank subsidiaries of U.S. bank holding companies that are active in the derivatives market.
Debt ratings are senior unless otherwise noted Debt Counterparty
Banc One Corporation Aa3 Aa3
Bank of New York Company, Inc A2 A2
BankAmerica Corporation A2 A2
Bankers Trust New York Corp. A2 A2
Boatmen's Bancshares, Inc. A2 A2
Chase Manhattan Corporation A2 A2
Chemical Banking Corporation A2 A2
Citicorp A2 A2
Comerica Inc. A2 A2
First Bank System, Inc. A2 A2
First Chicago Corporation A2 A2
First Interstate Bancorp A2 A2
Fleet Financial Group, Inc. A2 A2
J.P. Morgan & Co. Incorporated Aa2 Aa2
KeyCorp A1 A1
Mellon Bank Corp. A3 (subordinated) A2
NationsBank Corp. A2 A2
NBD Bancorp, Inc. A1 (subordinated) Aa3
Norwest Corp. Aa3 Aa3
PNC Bank Corporation A3 (subordinated) A2
Republic New York Corporation Aa3 Aa3
Sun Trust Banks, Inc. A1 A1
U.S. Bancorp A2 A2
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