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Fitch ups NatCity, affirms PNC
Fitch Ratings said it upgraded the ratings of National City Corp. and removed them from Rating Watch positive and affirmed the ratings of PNC Financial Services Group Inc., including its A+ long-term and F1 short-term issuer default ratings, B individual rating, A preferred stock and PNC Funding Corp.'s A+ long-term senior unsecured debt and A long-term subordinated debt.
Fitch upgraded National City's long-term senior debt to A+ from BBB+, long-term subordinated debt to A from BBB and preferred stock to A from BBB-; National City Bank (Cleveland)'s long-term issuer default rating and senior debt to A+ from A-, subordinated debt to A from BBB+, short-term issuer default rating to F1 from F2 and individual rating to B from C; the trust preferred stock to A from BBB; the senior debt of National City Bank of Indiana and National City Bank of Kentucky to A+ from A-; and the subordinated debt of National City Bank of Indiana, National City Bank of Kentucky, National City Bank of Pennsylvania and National City Bank (Columbus) to A from BBB+.
The outlook is stable.
The ratings of National City have been aligned with those of PNC following the merger of the two companies.
The agency said that while every merger has integration risks, PNC's track record with previous acquisitions has been solid, and the company has fared relatively well during the credit/asset quality crisis facing the banking industry due to small subprime mortgage exposure and large syndicated bridge lending.
A key challenge facing the combined company is the management of parent company liquidity, Fitch said. The agency believes PNC has sufficient sources of cash to maintain acceptable levels of liquidity for the foreseeable future, but the volume of near-term commitments and the large amount of preferred and trust preferred securities requiring debt service is relatively large.
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