Moody’s cuts Santander Holdings USA debt, preferreds

Moody's Investors Service said it downgraded the senior unsecured debt and non-cumulative preferred stock ratings of Santander Holdings USA, Inc. to Baa3 from Baa2, and to Ba3 (hyb) from Ba2 (hyb), respectively.

Santander Holdings USA is the U.S. holding company of Banco Santander, SA (deposits A3 stable, senior unsecured provisional A3, BCA baa1).

The agency also downgraded the standalone baseline credit assessment of Santander Holdings USA’s lead U.S. bank subsidiary, Santander Bank, NA, to baa2 from baa1.

At the same time, it affirmed the following ratings/assessments of Santander Bank: A2/Prime-1 deposit ratings; Baa2 issuer, senior unsecured and subordinate ratings; baa1 adjusted BCA; and A3(cr)/Prime-2(cr) counterparty risk assessments.

Following these actions, the outlook on Santander Holdings USA and Santander Bank is stable.

The ratings of Santander Holdings USA’s Puerto Rico bank subsidiary, Banco Santander Puerto Rico (A2/Prime-1 deposits, ba3 BCA, baa1 adjusted BCA), were unaffected by these actions.

Moody’s said the downgrade was driven by the weakening standalone credit strength of Santander Holdings USA’s lead bank, Santander Bank, as reflected by the downgrade of the bank's standalone baseline credit assessment to baa2 from baa1. The lower baseline credit assessment primarily reflects the bank's poor profitability, which hampers its ability to protect its strong capital ratios in times of stress.

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