S&P may cut Metris Cos senior unsecured debt rating Wednesday January 29, 3:19 pm ET
(The following statement was released by the rating agency) NEW YORK, Jan 29 - Standard & Poor's Ratings Services today placed its ratings on Metris Cos. Inc. (NYSE:MXT - News; Metris)-including the company's 'B' long-term counterparty credit and senior unsecured debt ratings and its 'CCC+' subordinated debt rating-on CreditWatch with negative implications.
The CreditWatch listing follows the Minnetonka, Minn.-based credit card company's announcement that it is reporting a loss of $48.5 million for fourth-quarter 2002.
With this loss and charge-offs continuing to run at elevated levels, Standard & Poor's is concerned that funding for the company may become increasingly limited. The company's funding alternatives are already under pressure as management continues to shrink deposits in its bank subsidiary and the ratings of many of its ABS have been downgraded.
"Standard & Poor's will decide whether to affirm or lower the ratings once it meets with management to discuss the status of the company's discussions with its bankers, as well as any progress in reining in loan losses and restoring profitability," said credit analyst Daniel Martin. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.
I think other agencies will follow S&P. When the debt is dowgraded then they need to pumped more cash and borrowing will become hard and expensive. While a company like COF can borrow money at 5% or less they have to offre 15% or more. The bond that they advertising is for 11% and nobody wants to buy it.