Moody's Cuts PNC Debt, Preferred Stock Ratings

NEW YORK (AP) — Moody's Investors Services on Tuesday cut its ratings on PNC Financial Services Group Inc., citing implications from its acquisition late last year of National City Bank.

The ratings agency cut Pittsburgh-based PNC Financial Services Group Inc.'s senior debt rating to "A3" from "A1," its subordinated debt rating to "Baa1" from "A2" and the preferred stock rating to "Baa2" from "A3." The holding company's short-term debt rating was downgraded to "Prime-2" to "Prime-1."

All of these ratings remain investment grade.

Moody's also cut the long-term ratings of PNC Bank NA and National City Bank, the two main bank subsidiaries of PNC Financial. Both banks' financial strength ratings were lowered two notches, to "C+" from "B." Their long-term deposit and senior debt ratings were lowered to "A1" from "Aa3," and their subordinated debt ratings were cut to "A2" from "A1."

The banks "Prime-1" short term ratings were affirmed.

Moody's said the outlook on PNC and its subsidiaries is negative. If the recession is deeper and longer lasting than currently expected, or if PNC mishandles the combination with National City, negative rating pressure could emerge, the agency said.