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Commercial banks

NationsBank Corporation Receives "A+" Rating from DCR

Strategic Insights

— 1 min read

NationsBank Corporation has announced the issuance of a $500 million senior floating-rate euronote issue, with a rating of "A+" (Single-A-Plus) assigned by Duff & Phelps Credit Rating Co. (DCR). This rating reflects the company's improved ability to achieve consistent quality earnings through all phases of a business cycle, as well as its asset quality and management structure. NationsBank's acquisition of nonbank business lines is expected to drive growth in the coming years, with revenue from these areas already exceeding the growth in the general bank.

Key Takeaways:

  • DCR assigned a rating of "A+" (Single-A-Plus) to NationsBank Corporation's $500 million senior floating-rate euronote issue.
  • The rating reflects the company's improved ability to achieve consistent quality earnings through all phases of a business cycle.
  • NationsBank's acquisition of nonbank business lines is expected to drive growth in the coming years, with revenue from these areas already exceeding the growth in the general bank.
  • The company's management structure and information systems promote an environment where management can be proactive in detecting potential problems.
  • Acquisition activity has expanded NationsBank's banking franchise in the Southeast, but high asking prices have led to a decrease in the acquisition of consumer and commercial finance operations.
  • NationsBank's expansion and increased complexity raise the issue of management's ability to maintain proper oversight and control over the franchise.
  • The company's strategic initiatives point to residential mortgage, credit card, and NationsSecurities as areas of strong growth.
  • NationsBank has recently demonstrated its willingness to shed businesses that are not meeting profit hurdles.

Statistics:

  • $500 million: the size of NationsBank Corporation's senior floating-rate euronote issue.
  • 3 years: the timeframe for the callable period of the notes.
  • 20 basis points: the margin over which the coupon rate will be reset quarterly.
  • A+: the rating assigned by DCR to NationsBank Corporation's senior debt.

Sources:

  • Duff & Phelps Credit Rating Co. (DCR) press release, June 19, 1995

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