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Moody's: Popular view stable
Moody's Investors Service said it changed the outlook on Popular, Inc. and its subsidiaries to stable from negative.
The outlook change follows Popular's announcement that it agreed to sell much of the mortgage and consumer loan portfolio of its direct U.S. consumer finance business to American General Finance for about $1.5 billion. The sale is expected to close later in the first quarter.
According to Moody's, the deal will reduce Popular's exposure to U.S. subprime mortgages.
"In shoring up its holding company liquidity, management can turn its full attention to improving the weak profitability performance of its U.S. operations," Allen Tischler, senior credit officer, said in a written statement.
"Popular faces a difficult year in 2008 as provisioning needs for its remaining U.S. subprime exposure will likely remain elevated, the U.S. economic environment is more uncertain, and its core Puerto Rico market is currently in a recession," Tischler added.
Popular's robust capital position, however, gives it the ability to absorb the expected credit costs, the agency said.
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