DBRS downgrades KeyCorp

DBRS said it downgraded the long- and short-term ratings of KeyCorp and its operating subsidiaries, including KeyCorp's issuer and senior debt ratings to BBB (high) from A (low), and the long- and short-term ratings of its operating bank subsidiary, KeyBank NA, to A (low) from A. At the same time, all FDIC-guaranteed AAA debt ratings were confirmed.

This concludes a review with negative implications that began in November, and the trends are stable.

The agency said the downgrade reflects KeyCorp's continuing struggle with steep asset quality deterioration; constrained earnings driven by asset quality deterioration and the economic downturn have contributed to seven consecutive quarterly net income losses.

The assignation of a stable trend reflects DBRS' perception that the company has built substantial balance sheet protection in its reserves, writedowns and augmented capital levels, the agency said, adding that the ratings are supported by a community banking-focused commercial banking franchise with historically diverse yet stable revenues.

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