Moody's keeps Popular Inc.'s outlook at 'Negative'

Moody's Investors Service on Wednesday left the outlook on its ratings for Popular Inc., the parent company of Banco Popular, at "Negative" after the bank agreed to sell most of the assets remaining at its U.S. consumer finance arm.

Shares of Popular fell 54 cents, or 6 percent, to $8.54. The stock has traded between $4.95 and $14.18 in the past 12 months.

The Banco Popular deal with units of Goldman Sachs Group Inc. includes nearly $1.2 billion in mortgage loans and servicing assets and is expected to give Popular about $700 million in liquidity when it closes in the fourth quarter, which starts in October.

Moody's said while the $700 million will cover most of the $900 million in debt that is maturing in 2009, steps the bank might consider such as selling more assets or otherwise raising funds, could weigh on the company's profitability at a time of economic weakness.

Popular's outlook could return to "stable," Moody's said, if the company is able to meet its 2009 liquidity needs without seeing any added weakness in its capital position or its short-term profitability.

Moody's said Popular's decision to halve its dividend should help preserve capital.

The holding company is rated at the investment grade "A3" for senior debt, and the lead bank, Banco Popular de Puerto Rico, is rated "C+" for bank financial strength and "A2" for deposits.