Moody's assigns Aa2 rating to State Street receipts
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Moody's assigns Aa2 rating to State Street receipts 19 July 2013Nevada Reporter: Georgina Lavers
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Moody's Investors Service has assigned a long-term rating of Aa2 to State Street Bank & Trust Co. Custody Receipts, Series 57 relating to Clark County School District, Nevada General Obligation (Limited Tax) Building Bonds Series 2006B.
Aa2 is rated as high quality and very low credit risk, but the rating is under review for downgrade.
However, the rating on the receipts could be raised if Moody's were to upgrade the long-term senior unsecured rating of the bank.
Earlier this month, it was revealed that State Street, along with BNY Mellon and Northern Trust were facing reviews of their long-term ratings because of narrow margins in core custody services and an over reliance on ancillary services such as securities lending, according to Moody’s.
The ratings agency placed the long-term ratings of the banks, including their bank financial strength ratings, all long-term senior debt, subordinated debt, and preferred stock ratings, on review for downgrade on 2 July.
The ratings review will focus on the long-term profitability challenges facing BNY Mellon, State Street and Northern Trust.
“These profitability challenges are driven by the aggressive pricing of all three banks' core custody products and services, such that their overall fee revenue is roughly similar to their total expenses.
The review will also examine the banks' ability to generate more revenue from custody-related services and cut costs,” said Moody’s in a statement.
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