Magazine article American Banker

Shawmut, BayBanks Ratings May Be Raised by Moody's

Magazine article American Banker

Shawmut, BayBanks Ratings May Be Raised by Moody's

Article excerpt

Moody's Investors Service Inc. said Thursday it may raise the debt ratings of Shawmut National Corp. and Baybanks Inc.

The possible upgrades, the latest sign of the New England economic recovery, would propel Shawmut's subordinated debt and Baybanks senior debt out of junk-bond status.

The agency said the reviews reflect reduced nonperforming assets and improved capital levels at both banks.

Raised Once Before This Year

Moody's has already raised each bank's ratings once since December.

Moody's is reviewing Shawmut's investment-grade Baa3 senior debt and junk-grade Ba1 subordinated debt, Ba2 cumulative preferred stock, and Ba3 noncumulative preferred stock.

The company's preferred stock would likely remain below investment grade even after an upgrade.

BayBanks' Ba1 senior debt rating is being reviewed. The $9.8 billion-asset Boston company has no other rated debt, but issues by its subsidiaries are also under review.

"The New England banks have now come full circle through the process of the resolution of nonperforming assets," said Allerton Smith, analyst at First Boston Corp.

"While the profitability of the banks in the long term will depend on the revival of the New England economy and loan growth," he added, "they certainly have stabilized and improved by a significant degree the risk measures in their balance sheets."

Stemming Tide of Bad Loans

Shawmut and BayBanks both struggled during 1990 and 1991 to stem a tide of bad loans. …

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