Moody's moots AmEx downgrade

8 August 2008

The credit rating of card giant American Express might be downgraded by Moody's, following disappointing financial results.

Last month, the provider posted a 38 per cent drop in second quarter profits, with unpaid loans rates on the up.

AmEx also said that its earnings growth target now stood at four per cent, down from its previous figure of six per cent.

In response, Moody's said that a downgrade might now be forthcoming.

A statement from the ratings agency added: "Today's rating action reflects Moody's concerns over AmEx's asset quality trends and lending exposures, particularly within geographic markets in the US that have experienced sharp home price declines.

"Broad economic weakness in the US, heavy consumer debt burdens, and home price erosion have also combined to place a damper on AmEx's card-member spending growth in the US."

Currently, AmEx's unsecured debt is rated A1 by Moody's - while its Travel unit and other subsidiaries are graded Aa3.

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