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Fitch Ratings took negative ratings action on individual corporates on Feb. 10, citing economic turmoil, credit market disruptions and exposure to potential write-downs of their paid-in-capital and PIC II investments at U.S. Central.Fitch’s individual ratings, which assess an institution without incorporating any external support, warned of U.S. Centrals losses and required NCUA intervention when it downgraded its IR from A to D shortly before the $1.2 billion Other Than Temporary Impairments announcement.At the bottom of the list is Constitution Corporate Federal Credit Union, which saw its individual rating tumble from B to D/E. Members United Corporate FCU and Southwest Corporate FCU both had their individual ratings lowered from B to C/D. All corporates rated by Fitch experienced an individual ratings downgrade, with none of the eight scoring higher than B/C.On the bright side, Fitch upgraded the support ratings and support floor ratings of all corporate credit unions to 1 and A+, as a result of the NCUAs actions to stabilize the system.“The NCUA has publicly stated that in addition to its recent capital contribution to U.S. Central Federal Credit Union, the NCUA will infuse capital as necessary into all corporate credit unions in the form of cash contributions from the National Credit Union Share Insurance Fund to provide stability to the system. The NCUA has also announced that it is soliciting industry comments and developing plans to restructure the corporate credit union system,” wrote Ken Ritz in the official release.The varying degree of notching between the individual ratings of each company largely reflects the risk of loss from each respective company’s investment portfolio and its U.S. Central PIC exposure relative to its capital position. In some cases, Fitch expects realized losses to be significant, particularly for those corporate credit unions holding mortgage- and asset-backed securities with exposure to home equity, subprime, and alt-A products. Regarding the PIC investments in U.S. Central, while it has yet to be determined how and when the corporate credit unions should account for the potential loss on their investment in U.S. Central, Fitch is assuming that the corporate credit unions will need to write off their PIC II investment entirely and perhaps a small portion of PIC I, which would also have a material impact on capital.–[email protected]

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