Moody's may lower Indymac

Moody's Investors Service said it placed the ratings of Indymac Bancorp, Inc. (issuer rating of Baa3) and its thrift subsidiary Indymac Bank, FSB (bank financial strength rating of C- and bank deposits at Baa2) under review for possible downgrade.

In particular, the agency said that the review will focus on potential charges in the held-for-sale portfolio and possible alterations to its current product and channel strategy.

"Investor demand for non-agency product has declined severely over the past month and Moody's expects write-downs on Indymac's inventory to be large in the third quarter," said Moody's senior vice president Sean Jones.

"Additionally, it is unclear if inventory write-downs would be limited to one quarter. These potential write-downs and the significant drop in residential mortgage loan origination and sales volumes, is likely to weigh on the thrift's profitability for a few quarters," said Jones.

Moody's noted that the thrift has strengthened its liquidity position in this challenging period by focusing its funding on deposits and Federal Home loan Bank advances.

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