Fitch Places Goldman Sachs on Negative Credit Watch

This is interesting: Fitch Ratings have just announced that the agency has placed The Goldman Sachs Group, Inc.‘s ‘A+/F1+’ long- and short-term Issuer Default Ratings (IDRs) and ‘a+’ Viability Rating (VR) on Rating Watch Negative. A whole bunch of major global banks gets the same treatment. I don’t think it matters that much to Mr. Blankfein & Co, thou – after all they’re just doing “God’s Work” – but it sends a signal to the market, adding a few more drops of uncertainty.

“Any adverse rating outcome would likely be limited to a one-notch downgrade of the long- and short-term IDRs, given the company’s stronger balance sheet and enhanced liquidity position relative to historical norms.”

Fitch Ratings

“In conjunction with a broad, global review of financial institutions and more specifically, global trading and universal banks, Fitch has placed several issuers on Rating Watch Negative, including Goldman Sachs (GS). Refer to the NRAC entitled ‘Fitch Places Seven Global Trading and Universal Banks on Rating Watch Negative,” the rating agency says in a press release.

Fitch believes that GS’s business model, like other global trading and universal banks face structural challenges given its wholesale funding profile and greater reliance on trading revenues.

“Fitch recognizes the steps GS has taken to diversify and extend its funding sources, as well as to de-lever its balance sheet, which will be reviewed in the context of other global financial institutions.”

The resolution of the Rating Watch Negative, which is expected to occur in the near term, will be based upon further analysis of the company and its peers, Fitch adds.

“Any adverse rating outcome would likely be limited to a one-notch downgrade of the long- and short-term IDRs, given the company’s stronger balance sheet and enhanced liquidity position relative to historical norms. This, combined with its leading positions in global capital markets are key franchise strengths supporting the firm’s ratings.”

The Goldman Sachs Group, Inc. is a global bank, providing underwriting, trading, financial advisory, asset management and securities services.

Business activities are now divided into four segments:

–Investment Banking;
–Institutional Client Services;
–Investing and Lending; and
–Investment Management.

Fitch places the following ratings on Rating Watch Negative:

Goldman Sachs Group, Inc.
Long-term Issuer Default Rating (IDR) ‘A+’;
— Long-term senior debt ‘A+’;
— Viability Rating ‘a+’
— Short-term IDR ‘F1+’;
— Commercial paper ‘F1+’;
Short-term debt ‘F1+’;
— Market linked securities ‘A+emr’;
Subordinated debt ‘A’;
Preferred equity ‘A-‘.

Goldman Sachs Bank, USA
— Long-term IDR ‘A+’;
— Long-term senior debt ‘A+’;
— Long-term deposits ‘AA-‘;
— Short-term IDR ‘F1+’;
— Short-term debt ‘F1+’;
— Short-term deposits ‘F1+’.

Goldman, Sachs & Co.
— Long-term IDR ‘A+’;
— Short-term IDR ‘F1+’;
— Long-term senior debt ‘A+’;
— Short-term debt ‘F1+’.

Goldman Sachs Bank (Europe) Plc
–Senior secured guaranteed debt at ‘A+’;
–Short-term secured guaranteed debt at ‘F1+’;
–Short-term debt at ‘F1+’.

Goldman Sachs International
–Senior secured guaranteed debt at ‘A+’;
–Short-term secured guaranteed debt at ‘F1+’;
–Short-term debt at ‘F1+’.

Goldman Sachs Paris inc. et Cie.
— Long-term IDR ‘A+’;
— Short-term IDR ‘F1+’.

Goldman Sachs Capital I
Trust preferred ‘A-‘.

Goldman Sachs Capital II, III
— Preferred equity ‘A-‘.

Ultegra Finance Limited
— Long-term senior debt ‘A+’;
— Short-term debt ‘F1+’.

Fitch affirms the following:

Goldman Sachs Group, Inc.
— Senior unsecured debt FDIC ‘AAA’;
— Short-term debt FDIC guaranteed ‘F1+’;
— Individual ‘B/C’;
— Support ‘5’;
— Support Floor ‘NF’.

Goldman Sachs Bank, USA
— Senior unsecured debt FDIC ‘AAA’;
— Short-term debt FDIC guaranteed ‘F1+’;
— Support ‘1’.

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3 Comments

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3 responses to “Fitch Places Goldman Sachs on Negative Credit Watch

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  2. Mark Alam

    made my way to your blog from yahoo and and am glad i found it, hope you keep up the good work

  3. Pingback: AIG Share Gains May Be Limited by Risk, Goldman Sachs Says | Wall Street Stocks