Moody's: Popular outlook negative

Moody's Investors Service said it changed the outlook on Popular, Inc. and its subsidiaries to negative from stable. The holding company's senior debt is rated A2.

The outlook change reflects the potential for heightened credit costs from its U.S. subprime mortgage portfolio along with ongoing profitability and asset quality pressures on its core Puerto Rican banking franchise, according to the agency.

Despite the negative outlook, Moody's said the company would benefit from its acquisition of Citibank's Puerto Rican branch network, which will further solidify Popular's leading deposit market position on the island, Moody's said.

But despite recent improvement, Popular's holding company liquidity position remains weaker than that of most of its similarly-rated U.S. peers, the agency said.

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