Fitch Ratings downgrades Merrill Lynch |
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Published
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Wed, 24 Oct 2007 16:48
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NEW YORK (AP) - Credit rating agency Fitch Ratings said Wednesday it downgraded investment bank Merrill Lynch & Co. due to its larger-than-expected losses in the third quarter.Fitch cut its issuer default and long-term senior debt ratings to 'A+' from 'AA-.' It cut Merrill Lynch's subordinated debt rating to 'A' from 'AA-.' All the ratings are still considered investment grade.In reporting losses of $2.31 billion, or $2.82 per share, Merrill took writedowns of $7.9 billion related to subprime mortgages and complex financial instruments known as collateralized debt obligations, or CDOs. Only two weeks ago, the company anticipated writedowns would be about $5 billion and losses would be around 50 cents per share.'Fitch believed the company maintained sufficiently robust risk management that was commensurate with its risk appetite,' Fitch said in a statement. 'However, the size of Merrill Lynch's CDO position and subsequent loss reveal deficiencies in risk management.'Fitch kept Merrill Lynch on a negative ratings watch, meaning the company could be downgraded further in coming weeks. Liquidity and pricing challenges are likely to continue indefinitely, which could result in lower revenue and further writedowns, Fitch said in the statement.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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