Fitch lowers Citigroup preferreds to C

Fitch Ratings said it downgraded the individual ratings of Citigroup Inc. and its subsidiaries to E from C/D, the company's preferred stock to C from BB and the trust preferreds ratings to B from BB.

The remaining ratings were affirmed, including Citigroup's A+ long-term and F1+ short-term issuer default ratings, A+ senior unsecured debt, A subordinated debt and AAA long-term and F1+ short-term FDIC-guaranteed debt.

The individual ratings and preferreds were removed from Rating Watch negative, and the outlook is stable. The trust preferreds remain on Rating Watch negative.

The agency said the plan announced Friday morning by Citigroup, and the U.S. government's participation in it, should provide needed stability and support to Citigroup.

However, on a standalone basis, Citigroup continues to be exposed to deteriorating macro-economic conditions and significant balance sheet stress, Fitch said. Greater relative credit risk and Citigroup's heavy reliance on continued U.S. government support measures have prompted the agency to downgrade the individual ratings, and Fitch said it lowered the preferreds due to the suspension of preferred dividends.

As for the trust preferreds, Fitch said that holders will not face immediate suspension of payments, but the agency believes the potential for future deferral is increasing.

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