Moody's lowers Indymac

Moody's Investors Service said it downgraded Indymac Bancorp, Inc.'s issuer rating to B1 from Ba2. This concludes the review that was initiated on Nov. 29.

Moody's said the downgrade reflects the agency's concern that Indymac's capital could be significantly impaired. Loan portfolios have exhibited significant deterioration and Moody's said it expects Indymac to report losses for several quarters due to higher provisioning and mortgage asset writedowns, the agency said. The losses could be at a level that impairs capital, Moody's added.

"Indymac is at a distinct disadvantage to its branch-banking competitors who have much more robust retail origination channels, balance sheet capacity to hold non-agency loans and low cost deposit funding," Moody's vice president Craig Emrick said in a written statement. "We expect Indymac to lose market share and struggle to be cost-competitive as an agency-only originator in 2008."

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