Moody’s changes DTCC outlook to negative

Moody's Investors Service said it changed the outlook for Depository Trust & Clearing Corp. and its clearing and depository agencies to negative from stable and affirmed all its ratings, including Aa3 long-term issuer rating and A2 (hyb) preferred stock non-cumulative local currency ratings

On Friday, Moody’s revised its outlook for the United States to negative from stable. The negative outlook for DTCC reflects the U.S.’ potentially weaker ability to support systemically important financial market utilities, Moody’s said.

"A downgrade of the Aaa US sovereign rating would likely result in a downgrade of the long-term ratings and clearing counterparty ratings of DTCC and its clearing and depository agencies," said Fadi Massih, a Moody's vice president and senior credit officer, in a press release.

"These ratings currently benefit from one notch of uplift to reflect the very high likelihood that the Government of the United States of America would intend to support DTCC's clearing and depository agencies should they suffer financial distress. However, should the creditworthiness of the government of the United States of America deteriorate, resulting in a downgrade of its Aaa rating, the government of the United States of America would have less ability to support DTCC's clearing and depository agencies, and their ratings would likely be downgraded as a result," Massih said.

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