Fitch cuts Central Pacific to junk

Fitch Ratings said it downgraded Central Pacific Financial Corp.'s long-term issuer default rating to B from BBB, short-term issuer default rating to B from F2, preferred stock to CC/RR6 from BBB- and individual rating to D/E from B/C.

The agency also downgraded Central Pacific Bank's long-term issuer default rating to BB- from BBB, short-term issuer default rating to B from F2 and individual rating to D from B/C as well as the trust preferred securities of CPB Capital Trust I, II, & IV and CPB Statutory Trust III & V to CC/RR6 from BBB-.

The ratings were placed on Rating Watch negative.

The two-notch differential between the holding company and its bank subsidiary reflect the holding company's limited amount of liquid assets and its restricted access to alternative liquidity sources due to existing regulatory agreements, Fitch said.

At the same time, the agency noted that the bank subsidiary's capital position has been fortified by these actions, as all the proceeds of Central Pacific's issuance of preferred stock to the U.S. Treasury was contributed to the bank subsidiary and dividends from the bank subsidiary to the holding company require prior regulatory approval.

The negative Rating Watch reflects the prospect that if the holding company is unable to bolster its financial resources in the near term and its access to liquidity remains restricted, the company will likely have to defer the dividends on its preferreds and the trust preferreds, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.