Ratings on Barclays and HSBC subordinated debt lowered

Moody's is continuing to lower its ratings on subordinated and hybrid debt issued by UK financial institutions as a result of its recent reassessment of the support environment for such securities, as reported here last week. This time it is the securities of Barclays Bank, HSBC Bank and HSBC Holdings that have been affected.

Barclays' subordinated debt rating was downgraded to 'Baa1' from 'A1' and its hybrid debt rating was lowered to 'Baa2' from 'A2'.  The rating on HSBC Bank's subordinated debt was downgraded to 'A2' from 'Aa3' and its hybrid debt rating was lowered to 'A3' from 'A1'. Similarly the ratings on HSBC Holdings' subordinated and hybrid debt were lowered to 'A1' from 'Aa3' and to 'A2' from 'A1', respectively. All ratings have a negative outlook.

S&P lowered its credit and financial strength ratings on most major US mortgage insurers during the week. Most ratings, including those on Genworth Mortgage Insurance Corp. (GMIC) were lowered by multiple notches but the 'BB' credit and financial strength rating assigned to Mortgage Guarantee Insurance Corp. was affirmed. The downgrades reflect a significant increase in S&P's estimate of losses arising from increasing unemployment and consequent loan delinquencies and the impact this revision will have on the companies' operating results, capitalisation, and competitive positions.

However, S&P subsequently affirmed its 'AA-' credit and financial strength rating on Genworth Financial Mortgage Insurance Pty Ltd (Genworth Australia), stating that downgrade of GMIC to 'BBB+' is tolerated within the four-notch differential allowed for GMIC, as a partial reinsurer of Genworth Australia's risk, but that limit has now been reached.  

Holcim Limited has had its long-term credit rating from Moody's lowered to 'Baa2' from 'Baa1', concluding a review for possible downgrade initiated a month earlier. The outlook is stable and its 'P-2' short-term rating remains unchanged.

The rating action reflects the deterioration for Holcim's leverage ratios and operating margins during the course of 2008 and the expectation that these metrics will not improve over the intermediate term to levels more commensurate with a Baa1 rating.
 
Holcim Australia Finance has $260 million of fixed and floating rate bonds on issue in the domestic market. The bonds will mature in August.