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Moody’s Raises Ratings on Citicorp, Chase Debt

March 18, 1994

NEW YORK (AP) _ A major Wall Street rating agency on Thursday upgraded its ratings on Citicorp and Chase Manhattan Corp. debt, saying both banks showed improved credit quality.

The move by Moody’s Investors Service came three days after another major rating firm, Standard & Poor’s, upgraded Citicorp’s long-term debt.

The ratings increases are significant, since they lower the cost of borrowing for the banks and enable them to attract more credit-worthy businesses.

The new ratings also reflect the substantial recoveries made by the two banks - and the industry as a whole - in the last several years as lenders have shed troubled real estate loans and cut expenses.

Moody’s cited Citicorp’s decision to sell its troubled Quotron financial data service as an example of cost cutting that’s improving profitability of the nation’s largest banking company. It also noted that bank regulators had canceled an unusual supervisory agreement imposed in 1992 as Citicorp struggled with a massive book of troubled loans.

The Moody’s rating upgrade to A2, or investment grade, came with a caveat.

″There is a risk that management’s focus and ambitions may once again exceed its resources,″ Moody’s analysts Michael Foley and Chris Mahoney said in a statement. ″However, the company’s growth and acquisition appetite are expected to be relatively modest over the medium-term.″

Citicorp officials didn’t immediately return a telephone call seeking comment. The rating upgrade affects $34 billion in Citicorp securities.

As for Chase, Moody’s cited sale of the bank’s problem real estate loans and reduced credit exposure to Third World countries.

″Management has implemented prudent and well-conceived strategies intended to maintain a stronger credit profile in the future,″ Moody’s said.

Michel Kruse, Chase’s chief financial officer, said the bank was pleased with the upgrade, which affected $8.4 billion in securities.

In November, Standard & Poor’s had revised its outlook on Chase from stable to positive, but didn’t upgrade the bank’s securities, a Chase spokesman said.

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