Moody's: Citigroup outlook negative

Moody's Investors Service said it changed the outlook on Citigroup Inc. and its subsidiaries to negative from stable and affirmed the company's senior debt at Aa3 following the announcement that Citigroup reported a net loss of $5.1 billion in the first quarter of 2008.

The agency said it affirmed Citigroup's ratings because even after the first-quarter losses incurred from credit costs, the company's regulatory capital surplus remains sizable. Citigroup's capital position improved noticeably in the past seven months because the company has issued over $30 billion in regulatory capital, Moody's said. In addition, the first-quarter write-downs of Citigroup's investment bank were within the agency's estimates, albeit on the high side.

The negative outlook resulted from the fact that investment bank charges were on the high side of Moody's estimates. The agency said future unexpected charges would lower its comfort about the size of Citigroup's regulatory capital surplus.

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