Thanks to the NCUA's share guarantee program extension, the $8.2 billion Members United Corporate FCU is dropping its contract with rating agency Standard & Poor's.
According to a letter to members from Chief Financial Officer Todd Adams posted yesterday on the corporate's Web site, the share guarantee "should reduce the need for supplemental funding sources."
Corporates subscribe to ratings agencies so they may participate in the commercial paper market. Not only do most new commercial paper offerings include guarantees these days, Adams said, but Members United's member deposits, its primary source of funding, is guaranteed by the program through Dec. 31, 2010.
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"With that information as a backdrop, carrying three sets of ratings seems to be a needless expense," he said.
The letter said the Warrenville, Ill.-based Members United may consider suspending its relationship with a second ratings agency, presumably Fitch or Moody's.
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