Moody's Withdraws Ratings for WM Covered Bonds

In a terse, enigmatic announcement Thursday (June 25), Moody's Investors Service withdrew its rating on the covered bonds issued by WM Covered Bond Program. 

The program was started in 2006 by Washington Mutual and currently is sponsored by JPMorgan Chase Bank, N.A.  It was the first covered bond program established in the U.S. and is one of only two extant here.  (The other is sponsored by Bank of America.)

Moody's gave no explanation except that it "has withdrawn this rating for business reasons."  The announcement then refers readers to Moody's official policy on withdrawal.

A look at the agency's withdrawal policy statement—Moody's Guidelines for the Withdrawal of Ratings—sheds little additional light.  "Business Reasons" is one of four possible reasons listed for assigning a Withdrawn Rating.  The applicable paragraph states:

"Business Reasons — Under certain circumstances, Moody's will withdraw a rating for an issuer or an obligation for reasons unrelated to the adequacy of information, or bankruptcy or reorganization status of the credit.  When this occurs, Moody's will balance the market need for a rating against the resources required to maintain and monitor a rating."

Note: In order to follow one of the links above, you will need first to log in (free) on the Moody's website (www.moodys.com).