Moody's cuts Barclays' ratings

[Joanne98]

HONG KONG (Reuters) - Moody's cut its long-term ratings on Barclays Bank by two notches to Aa3, citing expectations for "significant" further losses due to credit-related writedowns and rising impairments.

Moody's Investors Service maintained a stable outlook for the lender but lowered Barclays' Bank Financial Strength Rating to C from B, with a negative outlook, and cut the bank's hybrid instruments also by two notches to Aa3.

The action brings Barclays' long-term ratings in line with Fitch, which on Wednesday cut the lender by one notch to AA-minus citing the expected earnings volatility from investment banking unit Barclays Capital and deteriorating economic growth in key areas of operation.

The downgrades come after the lender last week said it could absorb a 2008 writedown of 8 billion pounds without seeking capital from private investors or the state.

Barclays also stuck to its forecast that its 2008 pretax profit would be "well ahead" of 5.3 billion pounds, even after the expected writedowns. It reports earnings on February 9.

"The downgrades reflect Moody's expectation of potentially significant further losses at Barclays as a result of writedowns on credit market exposures as well as an increase in impairments in the UK, which could weaken profitability and capital ratios," the agency said in a statement out on Monday morning.

http://uk.reuters.com/article/topNews/idUKTRE5110EZ20090202

* Sterling slides 3 pct vs dollar, euro

* Pound stung on BoE rate cut expectations, weak PMI data

* Moody's cuts Barclays' rating, sending shares tumbling

* UK shares down 1.3 pct; stg reverses last week's gains (Updates prices, adds comment, changes byline, dateline; previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 2 (Reuters) - Sterling plunged against the dollar and euro on Monday, pressured by Moody's downgrade on Barclays, weak UK data, and the prospect of another Bank of England interest rate cut this week.

Investors dumped the currency as the U.K. banking fears gripped the market, swiftly reversing last week's strong gains, when sterling enjoyed its biggest weekly percentage gains against the dollar in over 20 years.

"Negative headlines on the domestic banking sector in the UK are weighing on sterling against the G10 crosses," said Dustin Reid, senior currency strategist, at RBS Global Banking and Markets in Chicago.

Concerns on the financial sector, he added, may prompt the "Bank of England to cut interest rates by more than expected."

A Reuters poll showed that markets expect the BoE to cut interest rates to another historic low at 1.0 percent on Thursday, from the current 1.5 percent.

By 1511 GMT, the pound fell 2.0 percent to $1.4203 <GBP=>. It hit a session low at $1.4053 earlier, according to Reuters data, well below last week's levels when it hit its highest since January 19 at $1.4527.
Trade-weighted sterling also resumed its losses, falling to 76.60 <=GBP>.

http://www.reuters.com/article/marketsNews/idINN0244349120090202?rpc=44

[JuniperLea]

1. All of the rating agencies should be audited

Moody's, Standard & Poor's, AM Best... all of them.

If they had been doing their jobs, these banks and investment firms would have been down-rated long before they went belly up... or long before the Fed took them out into the backyard and shot them... whichever happened first.

[notesdev]

2. All an audit would find

is what we already know. The rating agencies' work product is fatally tainted by their relationship to the companies they rate.

Nobody in their right mind should take those ratings seriously. If Barclays, an effectively insolvent institution, rates Aa3 on anything, it more indicates what a mockery the ratings have become than any creditworthiness on the part of Barclays.