Moody's Kicking Citi & Pandit (C, MCO)

As if Citigroup Inc. (NYSE: C) had any real strength to its ratings, Moody’s has downgraded Citigroup’s senior debt.  Interestingly, Moody’s says that this downgrade was moderated by the expecation that Citigroup will probably get support from the U.S. government.  It is surprising that the Moody’s debt ratings were this high throughout this credit mess and horrible economy.

Here are the formal downgrades.  Moody’s downgraded the debt ratings ofCitigroup Inc. senior debt down to "A2" from "Aa3" and slashed theratings on its lead bank, Citibank N.A., long-term bank deposits to"Aa3" from "Aa1" in the call.   The financial strength rating on thebank was cut by three notches to "C" from "B."  This translates toa change in the baseline credit assessment to "A3" from "Aa3" and theoutlook on the bank’s financial strength rating is "negative" and the rating outlooks on the deposit and debt ratings at both the bank and the holding company are "stable."

There are other issues at hand here that may take away some of thehopes for any serious rebound in the coming months and quarters.Moody’s noted that Citigroup couldgenerate additional quarterly losses in 2009 and 2010.  It said this isdue to the need to continue to building loan loss reserves,particularly against its residential mortgage and credit cardportfolios.

There is more, but frankly you have heard this over and over.  One moreexample of the ratings agencies telling you what you already knew.

Maybe Vikram Pandit and friends at Citigroup can have its analysts downgrade Moody’s Corp. (NYSE: MCO) in retaliation tomorrow morning.

Jon C. Ogg
December 18, 2008