Moody's Lowers Rating On Bank Popular

NEW YORK (AP) — Moody's Investor Service on Tuesday downgraded ratings of Banco Popular de Puerto Rico and its parent, Popular Inc., a day after the company suspended preferred dividends and announced an exchange offer to raise common equity.

Moody's cut Banco Popular de Puerto Rico's financial strength rating to "D+" from "C," and the bank's long-term deposits to "Baa2" from "A3."

Moody's also lowered debt ratings of Popular Inc. The company's senior unsecured rating was reduced to "Ba1" from "Baa1," its subordinated rating to "Ba2" from "Baa2" and its preferred rating to "Ca" from "Baa3."

All the ratings, other than the preferred rating of the holding company, remain on review for possible downgrade, the rating agency said.

Moody's said that the downgrade of Popular's ratings followed the company's announcement on Monday to suspend preferred dividends and have an exchange offer to raise common equity, as well as the expectation of increased credit losses. Popular intends to raise more than $1 billion in common equity, an amount well above its current market capitalization.

Moody's said the downgrades were prompted by increased credit concerns and the challenges Popular faces in raising its planned amount of common equity.

Shares of Popular dropped Tuesday afternoon, falling 19 cents, or 7.4 percent, to $2.36. Shares have traded between $1.42 and $12.45 during the past year.