Moody's Investors Service on Friday downgraded the ratings of Marshall & Ilsley Corp. and its subsidiaries and also changed its outlook to negative.
Moody's downgraded the company's senior debt by one notch to Baa1, characterized as lower medium grade investment debt, from A3, which is upper medium grade investment.
Moody's said its downgrade reflects the likelihood that the company "faces sizable credit losses throughout 2010 resulting from its real estate concentration." Moody's said the credit losses would prevent the company from returning to profitability in the near-term.
Moody's said, however, that those potential losses would be mitigated by the company's stronger liquidity, now that it issued $863 million in common shares.
The rating agency also downgraded the bank's financial strength rating to the last level before default, C. The long-term deposit rating was lowered by one notch to A3 from A2, both in the upper medium grade investment category.
Marshall & Ilsley, based in Milwaukee, Wis., operates banks. Its shares rose 17 cents, or 3 percent, to $5.63 in afternoon trading.