NEW YORK — Standard & Poor's released its corporate credit union rating review that delivered bad news to Western Corporate FCU and Members United Corporate FCU, placing both institutions on CreditWatch negative.
The review also singled out Southeast Corporate and Southwest Corporate, revising their outlook ratings from stable to negative. Outlook ratings are only issued to the handful of corporates that offer medium or long-term notes.
Despite plenty of complimentary words regarding the corporates' liquidity and overall financials, S&P was critical, saying in a statement that "the rated corporates have increasingly diverged in their strategies and financial management the past few years. Whereas for years we have voiced concerns about how this would affect the creditworthiness of individual corporates, the extent and impact of the divergence was masked by healthy market and economic conditions, good risk-management track records and the incremental nature of the divergence in risk profiles."
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S&P drew a line in the sand between those corporates that have suffered relatively few losses, thanks to traditional investment policies, and those that have invested in what the ratings agency called "at-risk securities, specifically 2005-2007 vintage subprime, Alt-A and home equity-backed structured securities."
The release said the primary factor in delivering negative ratings news was the amount of each corporate's exposure relative to its capital.
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