Moody's Downgrades Citigroup (C)

Moody's Investors Service confirmed the A3 long-term rating of Citigroup (NYSE: C) and the A1 long-term and Prime-1 short-term ratings of Citibank N.A. At the same time, Moody's downgraded the short-term rating of Citigroup (the holding company) to Prime-2 from Prime-1. The actions conclude a review for possible downgrade announced on June 2, 2011. The outlook on the long-term senior ratings remains negative.

The confirmations reflect two offsetting factors: a decrease in the probability that the US government would support the bank, if needed, and an improvement in the bank's stand-alone credit profile reflected in an increase in Citibank N.A.'s unsupported baseline credit assessment (BCA) to Baa1 from Baa2.The downgrade of the short-term rating of Citigroup results from the reduced assumption of systemic support. Typically A3-rated companies are rated Prime-2 for their short-term obligations.

Citigroup's Prime-1 had been an exception to this general practice, based on the view that short-term creditors benefited the most from the unusually high level of government support provided to banks during the financial crisis. The downgrade to Prime-2 is not a reflection of Citigroup's liquidity profile, which strengthened significantly in the past two years and is robust.

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