Moody's downgrades Synovus

Moody's Investors Service said it downgraded Synovus Financial Corp.'s subordinated regular bond rating to B3 from B2 and the issuer rating of Columbus Bank & Trust Co. to B1 from Ba3.

The ratings were placed on review for possible downgrade.

The agency said the downgrade is the result of Synovus' losses in commercial real estate being greater than Moody's loss expectations for the last several quarters. Moody's expects that credit costs will remain elevated for at least 2010, hindering Synovus' ability to generate positive earnings.

The action also reflects the sizeable amount of nonperforming assets of $1.8 billion, Synovus' high commercial real estate concentration and its footprint in the troubled southeastern United States, the agency added.

The review will focus on the impact of several strategic capital initiatives that Synovus is considering. Moody's warned that if Synovus' capital initiatives do not result in a significant increase to its capital base, a further downgrade is likely.

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