Moody's Lowers Ratings on Chase Manhattan Debt
Moody's Investors Service Inc. said it was lowering its ratings on about $7.6 billion of long-term debt of Chase Manhattan and its banking subsidiaries by one notch.
The downgrade was made as part of a review of all major U.S. banks prompted by concern about their exposure to the real estate market, said Christopher T. Mahoney, an associate director at Moody's.
``The U.S. is facing a cyclical real estate problem similar to what it had in the mid '70s,'' he said, ``and this time we may not be inflated out of it the way we were in the late '70s.''
The move comes on the heels of a similar downgrading of Citicorp, the nation's largest bank, by Moody's and another rating agency, Standard & Poor's Corp.
It also comes at a time when federal regulators have cautioned banks to be prudent in lending, particularly for real estate projects. Some politicians and builders have criticized the regulatory scrutiny, saying it has produced a credit crunch that could tip the economy into recession.
The national real estate market has deteriorated recently, particularly in the Northeast, Mid-Atlantic and Southeast, Mahoney said. ``Chase has a heavy weighting in those areas,'' he said.
Moody's estimates that Chase's $107 billion of assets, second only to Citicorp, includes roughly $9 billion in real estate loans.
The credit agency's concerns were mitigated somewhat by Chase's efforts to bolster its capital and cut unprofitable businesses, Mahoney said. The bank's credit standing continues to be supported by the diversity of its businesses and its holdings of undervalued assets, Moody's said. …