Synovus long-term ratings on review for downgrade on TSYS spin-off - Moody's |
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Fri, 26 Oct 2007 06:39
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MUMBAI (Thomson Financial) - Moody's Investors Service said it has placed its 'A3' long-term ratings on Synovus Financial Corp's (SNV) subordinated debt and its units under review for possible downgrade, after SNV said it will spin-off its data processing unit, Total System Services Inc (TSYS), in the fourth quarter.The long-term ratings of SNV's lead bank, Columbus Bank & Trust Co, are also under review for downgrade. Moody's has a 'B-' financial strength and 'A1' bank deposits ratings on the bank.The ratings agency also changed the outlook on Synovus and its subsidiaries ratings to under review from stable.Moody's said the review will focus on the degree to which the spin-off affects SNV's profitability metrics, earnings diversification and double leverage. Moody's also notes that SNV's commercial real estate portfolio (CRE) represents a significant concentration risk.At end-June, SNV's true CRE (excluding owner-occupied loans) was over 3.6 times consolidated Tier 1 capital. The concentration will become even more pronounced as earnings diversification and capital levels are reduced due to the spin-off, the ratings agency said.Also, construction and land loans, which Moody's views as inherently risky, represent a high proportion of the CRE portfolio. Moody's said the review will also stress on SNV's CRE portfolio in light of worsening market conditions.TFN.newsdesk@thomson.comypv/manCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Synovus Financial to spin-off TSYS 