Washington Mutual: Junk
September 12th, 2008Via: Reuters:
Washington Mutual Inc shares fell on Friday after the largest U.S. savings and loan projected another big write-down for soured loans and was downgraded to “junk” status by a leading credit rating agency.
At least four analysts cut their price targets for the thrift, though Goldman Sachs & Co raised its rating to “neutral” from “sell.”
Washington Mutual shares were down 16 cents, or 5.7 percent, to $2.67 in pre-market trading. Through Thursday, the shares had fallen 34 percent this week and 92 percent in the last year.
In an unusual move to quell investor anxiety about its survival prospects, Seattle-based Washington Mutual late Thursday released third-quarter projections six weeks early and said it had ample liquidity. The thrift has said losses from home loans could reach $19 billion through 2011.
But Moody’s Investors Service lowered Washington Mutual to below investment-grade status, citing “reduced financial flexibility, deteriorating asset quality, and expected franchise erosion.” Fitch Ratings also downgraded the thrift.
Washington Mutual said it expects to set aside $4.5 billion for loan losses in the third quarter, down from the second quarter’s $5.9 billion. It also said it expects about $2.7 billion of loan write-offs.
The outlook suggests that Alan Fishman, Washington Mutual’s new chief executive, will next month report the thrift’s fourth straight quarterly loss.
