Printer Friendly

CHEMICAL BANKING $4.1 BILLION SENIOR DEBT TO BE RATED 'A' BY FITCH -- FITCH FINANCIAL WIRE --

 CHEMICAL BANKING $4.1 BILLION SENIOR DEBT TO BE RATED 'A' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Jan. 9 /PRNewswire/ -- Chemical Banking Corp.'s $4.1 billion senior debt will be assigned an 'A' rating by Fitch upon completion of the company's $1.25 billion common stock offering. This new bank holding company was formed from the December 31, 1991 merger of Manufacturers Hanover Corp. and Chemical Banking Corp. Ratings of both former companies were placed on FitchAlert on July 22, 1991 with positive implications. Formal removal from FitchAlert will coincide with the completion of the common stock offering.
 The new senior debt rating represents an increase over the 'BBB+' rating previously assigned to the former Chemical Banking Corp. as well as the 'A-' rating previously assigned to the senior debt of Manufacturers Hanover Corp. Following the completion of the common equity sale, the commercial paper rating of the new company will be 'F- 1'. The $1.5 billion subordinated debt and $1.6 billion preferred stock of the new Chemical will be rated 'A-' and 'BBB+', respectively. While the parent companies have merged, the primary bank subsidiaries, Chemical Bank and Manufacturers Hanover Trust Co. will retain separate bank charters until mid-1992, when they will be joined under the name Chemical Bank. Long and short term certificate of deposit ratings of the banks will be 'A/F-1'.
 The new ratings reflect improved consolidated capital ratios, strengthened core earnings enhanced by meaningful reductions in overhead costs, substantial liquidity at the parent and banking subsidiaries, modest double leverage, and improving asset quality measurements and higher reserve coverage of problem loans.
 The initiation of this new banking organization offers a unique opportunity to blend the strongest managerial talents of both institutions, coupling these personnel resources with a broad mix of financial products. Wider diversification within the loan portfolio will strengthen the combined balance sheet as will the enhanced core deposit base. A wide universe of relationships in middle marketing lending will give Chemical a key competitive edge when the economic cycle takes a positive turn. Geographical diversification via the Texas affiliate is a positive.
 Proforma for Dec. 31, the $1.25 billion common stock offering expected to be completed late this month will give Chemical a Tier I leverage capital ratio of approximately 5.65 percent. This compares to an average of 5.23 percent for the ten largest multi-national banking companies at the end of 1991's third quarter. More important, with $225 million of overhead expenses savings in 1992, projected retained earnings from the expected $900-925 million of net income should boost this ratio to a range of 6.40-6.50 percent by year-end 1992, well above the expected multinational peer average. Double leverage, pro forma for year-end 1991 is estimated at about 108 percent, with a manageable future range of 110-112 percent projected by Fitch.
 Chemical's total nonperforming assets at the end of 1991 stood at $6.2 billion, down from $6.7 billion a year earlier. The principal shift has been in the nonperforming lesser developed country (LDC) category. This component of problem assets declined from $2.5 billion to $1.2 billion during 1991, including about $500 million of Brazilian exposure written-off during the final quarter of last year. The reserve for loan losses of the new corporation aggregated $3.28 billion at the end of 1991, representing 71 percent of nonperforming loans. The non- LDC reserve was equal to 60 percent of non-LDC nonperforming loans.
 As to asset leverage, the new company has a moderate loan to assets ratio of 60 percent, which is roughly 10 percentage points below its primary multinational peers. This will allow Chemical flexibility when economic activity once again creates meaningful growth in loan demand.
 -0- 1/9/92
 /CONTACT: Fred W. DeBussey of Fitch, 212-908-0521/
 (CHL) CO: Chemical Banking Corp. ST: New York IN: FIN SU: RTG


KD -- NY066 -- 8327 01/09/92 15:10 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jan 9, 1992
Words:654
Previous Article:THE PRESIDENT & OTHER JET LAG SUFFERERS NEED LIGHT
Next Article:ROYCE LABORATORIES PUBLIC OFFERING DECLARED EFFECTIVE
Topics:


Related Articles
CHEMICAL BANKING $4.1 BILLION SENIOR DEBT 'A' BY FITCH AFTER STOCK ISSUE -- FITCH FINANCIAL WIRE --
SOUTHERN BELL, SOUTH CENTRAL BELL 'AAA' DEBT FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --
RJR NABISCO $1.2 BILLION NEW SENIOR DEBT RATED 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --
CHEMICAL BANKING $1.1 BILLION SHELF DEBT, PREFERRED RATED BY FITCH FITCH FINANCIAL WIRE
BARNETT BANKS ON FITCHALERT WITH EVOLVING IMPLICATIONS -- FITCH FINANCIAL WIRE --
CHEMICAL BANKING $100 MILLION 7.375 PERCENT SENIOR NOTES RATED 'A' BY FITCH -- FITCH FINANCIAL WIRE --
FITCH AFFIRMS RATINGS ON CHEMICAL DEBT ASSUMED FROM MHT -- FITCH FINANCIAL WIRE --
RJR NABISCO $2 BILLION SENIOR SHELF DEBT RATED 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --
AFRICAN DEVELOPMENT BANK $300 MILLION SENIOR NOTES RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --
OCCIDENTAL PETROLEUM $150 MILLION TWO-YEAR MEDIUM TERM NOTES RATED 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters