NEW YORK – U.S. Central has defaulted, and survives only because of external support. That's the message from Fitch Ratings, who lowered the corporate's Individual Rating yesterday from "D" to "F" in response to last week's $1 billion bailout.
"The net loss of approximately $1.1 billion for 2008 exceeds USC's retained earnings, the recently issued $450 million of Paid-In-Capital (PIC) II and a portion of the original PIC issuance," said yesterday's official Fitch release. "Additionally, the prospect of future losses remains, limiting the company's future capital
generation capability."
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U.S. Central's other ratings with Fitch include a long- and short-term Issuer Default Ratings of "AA" and"F1+" respectively, though both are on Rating Watch Negative pending the success of the NCUA's corporate stabilization plan and possible corporate system restructure. U.S. Central's "F" Individual Rating probably won't last long, Fitch said.
"Once clarity is achieved on how the support measures, as well as the proposed restructuring of the corporate credit union system impacts USC's financial profile and business model, Fitch will reassess the Individual rating," the release said.
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