Moody's lowers rating of Legg Mason debt
Moody's Investors Service cut Legg Mason Inc.'s senior debt rating yesterday in recognition of the Baltimore money manager's struggling profitability because of its weak performance and costs related to shoring up some money market funds invested in soured mortgage-related securities. The rating agency lowered Legg's rating one notch to A3 from A2, affecting $2.2 billion in senior notes. Moody's noted that clients continue to take money out of Legg's mutual funds, hurting its assets under management. It also said Legg's after-tax losses related to its money market support in the past year now exceed $650 million. Moody's warned that these "losses have the potential for increasing and ultimately being realized." The rating agency placed the company's rating under negative outlook, which means another downgrade is possible. Legg Chief Financial Officer Charles J. Daley Jr. said in a statement that the company is well-positioned to manage the continuing financial turmoil as reflected in its investment-grade rating. Legg raised more than $2 billion in the past year to shore up its balance sheet. "As Moody's noted, we have ample cash to support the current cash collateral needs related to our support of our money funds," Daley said. Legg shares lost $5.09, or 14.9 percent, to close at $29.01 yesterday. Moody's announcement came after the market's close.
Sandy Spring Bancorp to take $2.3 million charge
Sandy Spring Bancorp Inc., the Olney-based parent company of the namesake bank, said yesterday that it will take a pretax, noncash charge of $2.3 million in the third quarter related to the goodwill impairment of its leasing subsidiary. The write-down will affect third-quarter earnings by 8 cents per share, after taxes. Sandy Spring's Equipment Leasing Company arranges leases of office furniture, technology and other equipment for small and midsize businesses. The bank said it remains well-capitalized. Shares of Sandy Spring fell 12 cents to close at $18.68 on the Nasdaq stock market yesterday.