NEW YORK (2/13/09)--In light of the National Credit Union Administration's (NCUA) efforts to stabilize and support the corporate credit union system, Fitch Ratings Tuesday announced it has upgraded the "Support" and "Support Floor" ratings for all corporate credit unions to "1" and "A+," respectively. However, it also adjusted downward eight corporates' individual ratings. Use the link for the ratings. In upgrading the support level ratings, Fitch noted NCUA's proposal for a $1 billion capital contribution to U.S. Central FCU, its plan to infuse capital into all corporate credit unions, as necessary, from the National Credit Union Share Insurance Fund (NCUSIF), and the agency's development of plans to restructure the corporate credit union system (Business Wire Feb. 10). Fitch said it took action on ratings of individual corporate credit unions due to market dislocation reducing liquidity in the system and the possible sizeable realized losses in some investment portfolios. "By their nature as nonprofit cooperative systems," said Fitch in press release, "corporate credit unions are highly leveraged institutions that generate lean earnings. Meaningful realized security losses, including other-than-temporary impairment charges, could impair the capital positions of corporate credit unions." The ratings also consider the corporate credit unions' exposure to potential write-downs of their paid-in-capital (PIC) and PIC II investments in U.S. Central following its recent report of a $1.1 billion loss for 2008 and NCUA's intervention, Fitch said. Another ratings agency, Standard & Poor's (S&P), which took a tougher position, noted that NCUA's and the movement's support is important in rating the corporate credit unions. "This explicit support for the corporate system has become a major ratings factor for all rated corporates," S&P said. "We still believe that this support should provide U.S. Central and the corporates with the means to weather their current stress and fulfill their mission to members," S&P said. However, citing concerns over opposition to NCUA's corporate stabilization plan, S&P said it has placed counterparty credit ratings of nine corporate credit unions into "CreditWatch with negative implications" category. A 10th credit union is already at that rating. In announcing the ratings, S&P Credit Analyst Robert B. Hoban Jr. said the credit union system's opposition to NCUA's plan "could complicate the regulator's and the industry's efforts to address the deterioration in many of the corporate credit unions' holdings of mortgage-backed and other structure securities." S&P will monitor the progress of the efforts to get additional aid for credit unions from the federal government. It could affirm the ratings if the movement's efforts bear fruit, S&P said.