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Moody’s downgrades Northern Rock’s financial strength rating

Moody’s Investor Service has downgraded Northern Rock’s bank financial strength to E from E+.

The bank’s dated and undated hybrid subordinated debt were also downgraded to Ca from B1 and B3, respectively and its subordinated instruments were given a “negative” outlook.

Moody’s says the downgrade highlights the severe deterioration in Northern Rock’s intrinsic financial fundamentals reflected in reported pre-tax losses of £1.4bn as of year-end 2008.

It says: “The E BFSR, which is the lowest financial strength rating within the Moody’s ranking system captures the fact that solely on its current financial fundamentals, and without government support, the bank’s viability as a going concern is extremely compromised.”

Moody’s last rating action on the lender was on February 20 when its senior debt and deposit ratings were downgraded to A2 and its outlook was changed to developing.


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