Moody's Places WaMu (WM) Ratings Under Review

July 22, 2008 5:06 PM EDT

Moody's places Washington Mutual's (NYSE: WM) senior unsecured rating of Baa3 and Washington Mutual Bank's financial strength rating of C-, long-term deposit rating of Baa2, and short term rating of Prime-2 under review for downgrade.

Moody's says the review comes after today's Q2 earnings report from WaMu. The credit agency said it will assess WaMu's financial flexibility based on the earnings report and will include the review of WaMu's ability "to manage unexpected losses given WaMu's significant asset quality issues and the related provisioning needs."

With WaMu's financial flexibility reduced recently, Moody's believes "it would be expensive, at best, for WaMu to raise new equity capital or issue new debt given the market's current negative opinion of the company." At the same time, Moody's says despite the decline in its value, WaMu's liquidity remained sufficient in this difficult macro environment. Specifically, the company's cash balances are sufficient to cover holding company cash needs through 2009.

Washington Mutual, Inc., together with its subsidiaries, operates as a consumer and small business banking company in the United States.

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