NEW YORK – Moody's action to place four relatively small corporates on ratings review is the result of the stress on U.S. Central's balance sheet, not their own.
Moody's Managing Director Robert Young wrote in his Dec. 22 rating action report that $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 have relatively less asset-backed securities exposure than the others; however, they have concentrated exposure to U.S. Central through member shares and member capital shares deposited at the corporates' corporate.
"Although Moody's views a potential failure of U.S. Central as a very low probability event, such an event would likely result in a loss on member capital shares that the CCUs have placed at U.S. Central," Young wrote, citing member capital share losses that occurred at Capital Corporate Federal Credit Union back in 1995.
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It's been decades since some corporates dinged by the report have had ratings action. Central Corporate, for example, hasn't had one single ratings action taken since it was first assigned a short-term rating back in 1988.
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