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Fitch affirms ratings of eight corporates
MADISON, Wis. (5/17/10)--Fitch Ratings has affirmed the long- and short-term Issuer Default Ratings (IDRs) at “A+” (high credit quality) and 'F1+' (highest short-term credit quality), respectively, of eight major corporate credit unions. The Rating Outlook is Stable. The affirmation of the IDRs is based on the National Credit Union Administration's (NCUA) continued support for these companies, Fitch said in a press release. Recently, NCUA extended a waiver that permits corporate credit unions to operate below minimum regulatory capital requirements. Also, NCUA is in the process of developing a plan to remove roughly $50 billion of problem securities from the corporate credit union system, Fitch said (Business Wire May 13). The IDRs reflect the companies' '1' support and 'A+' support floor ratings, which acknowledge NCUA’s support and emphasize the importance of government support in assessing probability of default. “Given this continued support, Fitch said it believes that the existing support ratings, support floors, and IDRs remain appropriate at this time. As such, the Outlook is Stable,” it said. Also, Fitch said the corporates will continue to benefit from the planned restructuring of the corporate credit union network and the implementation of new regulations. However, Fitch said a restructuring of the network could potentially lessen the level support provided to these companies in the future. The Individual ratings of the corporate credit unions rated are at “E”, reflecting that these companies still have serious capital challenges and largely operate below regulatory capital minimums, Fitch said. With the exception of Eastern Corporate FCU (EasCorp) and Mid-Atlantic Corporate FCU (Mid-Atlantic), the corporate credit unions operate with total capital ratios below mandatory regulatory requirements necessitating regulatory forbearance from the NCUA. Constitution Corporate FCU is operating under special regulatory assistance related to its depleted capital position. Fitch said some institutions have a heightened risk of regulatory intervention due to the corporate credit unions’ weak capital position and the prospect of future losses in their investment book. Should any institution require regulatory intervention, Fitch said it would expect the level of governmental support for the company to remain unchanged. For a complete list of ratings actions for each of the eight corporates, use the link.
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