NEW YORK – Moody's Ratings Service released the results of its regularly-scheduled credit union industry review this week, and delivered lumps of coal to several cooperative stockings.
Not only did Moody's downgrade the $28 billion Western Corporate Federal Corporate Credit Union's long-term ratings to A2 from Aa3, it also knocked the $36 billion U.S. Central Federal Credit Union down a notch, from A1 to Aa1. Both WesCorp and U.S. Central have other ratings currently on review for possible downgrades.
Moody's affirmed other corporates' ratings, but placed the Prime-1 commercial paper ratings on review for possible downgrade at the following corporates: $8.7 billion Members United Corporate Federal Credit Union, $5 billion Corporate One Federal Credit Union, $2 billion Central Corporate Credit Union, $2 billion Corporate Central Credit Union and $2 billion SunCorp Credit Union.
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"The ratings actions on the other five CCUs listed above reflect the increased stress placed upon the CCU network as a result of the global credit crisis and its impact on the liquidity and valuations of the CCUs' investment portfolios," wrote Moody's Managing Director Robert Young in one report.
Young noted that Moody's expects actual corporate investment losses to be much less severe than their current value indicates; however, "the potential for realized losses is a significant risk relative to their firms' modest capital bases and limited earnings."
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