NCC

[Art G]

Any thoughts? National City Bank. I'm looking at some very short term bonds around 10%. However, I'm not finding much info on the company, other than the bonds being A+ rated. Anyone think they won't be in business in a year?

 

[clifp]

I am pretty sure they are on a FDIC watch list for possible future action. Their capital situation is dicing and they've gut there dividend to $.01 laid off staff etc. I've been writing options on the bank for a while figuring the common will continue to slowly decline.

 

[Art G]

But will they exist in a year?

 

[terminator]

If you want opinions, I'll say yes they are around in a year but that 10% is not sufficient to compensate you for the risk.

They did raise a lot of capital in the spring when they basically tripled their outstanding shares.

But personally I'd rather take 7.5-8% from USB debt than 10% from NCC.

 

[Art G]

Well that's my question I guess. From what I've found, it doesn't look like NCC is going anywhere, so the risk is very small for a 10%+ return for a year.

 

[clifp]

S&P just cut ratings on them.

The rating agency downgraded Cleveland-based National City Corp's (NCC.N: Quote, Profile, Research, Stock Buzz) long-term rating to "A-minus," its fourth-lowest investment grade, from "A," and cut its short-term rating to "A-2" from "A-1." It also downgraded Memphis, Tennessee's First Horizon National Corp's (FHN.N: Quote, Profile, Research, Stock Buzz) long-term rating one notch to "BBB," its second-lowest investment grade, from "BBB-plus."

 

[Art G]

Thanks. Yeah I saw that yesterday. The senior notes were cut to A. At least now it's listed as stable.
On a side note, I'm seeing some FOUR MONTH Washington Mutual cp bonds with a YTM of around 25%. Anyone?