NEW YORK — Standard & Poor's Credit Analyst Robert B Hoban Jr. said negative ratings watches don't mean corporate credit unions are in jeopardy of the free-fall ratings downgrades other institutions have received in recent weeks.
Hoban defended his decision to open the corporate ratings review by heaping compliments on the aggregates, saying those reading ratings news should consider it in the context of the corporate system's overall strength and risk aversion. Though Western Corporate and Members United Corporate received negative watches on their short-term ratings, they're in far better shape than failing institutions that are making today's headlines, he said.
However, Hoban cautioned that field of membership expansion and increased competition among corporates has contributed to tighter margins and higher overhead, and could potentially lower some corporates' long-term ratings.
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"Our view is that changes in the industry have undermined the rationale for long term ratings to be that high," Hoban said of the AA long-term ratings of Southeast Corporate and Southwest Corporate, which were given negative outlooks. WesCorp's negative rating watch also applied to its AA- long term rating.
Hoban said corporates that have remained within their original field of membership footprint, and haven't budgeted resources toward aggressive growth, are suffering comparatively few losses.
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