Moody's drops Primus Financial

Moody's Investors Service said it downgraded the counterparty rating of Primus Financial Products LLC, and the ratings of its subordinated deferrable interest notes (series A), subordinated 2005 deferrable interest notes (series A and series B), and the perpetual NC-10 floating-rate cumulative preferred securities (series I and series II).

Moody's said it also downgraded to Ba3 from Ba1 the senior unsecured and issuer ratings of Primus Guaranty, Ltd.

Affected ratings include Primus Financial's counterparty rating now at A1 on review for possible downgrade; $75 million of subordinated deferrable interest note, series A, now at A1 from Aa1 on review for possible downgrade; $75 million subordinated 2005 deferrable interest notes, series A now at A2 from Aa2 on review for possible downgrade; $50 million of subordinated 2005 deferrable interest notes, series B now at A2 from Aa2 on review for possible downgrade; and $110 million of perpetual NC-10 floating-rate cumulative preferred securities (series I and series II) now at A3 from A2 on review for possible downgrade.

According to Moody's, the rating actions are the result of deterioration in the credit quality of Primus' CDS reference portfolio.

In particular, Primus has through its portfolio of reference obligations credit exposure to Kaupthing Bank, which was taken over by the Icelandic supervisory on Oct. 9, the agency said.

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