Company News: S&P gives mortgage firm ‘junk’ rating

Standard & Poor’s said Tuesday it cut IndyMac Bancorp Inc.‘s credit rating to “junk” status, citing increased risk the struggling mortgage bank will suffer additional losses given the turmoil in the housing and mortgage finance markets.

Standard & Poor’s reduced the Pasadena, Calif.-based company’s rating to noninvestment grade “BB+/B” from investment grade “BBB-/A-3” and set its outlook as negative. That means there is about a one-in-three chance the company’s credit rating could be cut again in the next two years.

“This action was taken in response to concerns about Indymac’s exposure to deteriorating housing markets and the effect credit losses will have on capital levels,” S&P credit analyst Robert B. Hoban Jr. said in a statement.

A call to IndyMac was not immediately returned.

The agency said there was an increased likelihood that IndyMac’s profits, already battered by the impact of rising home loan defaults on its books, could see more bad loans and additional quarterly losses.

If profits remain weak, that could hurt capital levels and its ability to cope with high credit losses, the agency concluded.

“We currently consider capital to be adequate, but additional losses could make capital a primary concern,” S&P said.

Nissan North America Inc. will build a midsize pickup truck for Suzuki Motor Corp. at Nissan’s plant in Smyrna, Tenn., starting in 2008.

The companies said in statements Tuesday that the pickup will be based on Nissan’s Frontier midsize pickup and will be solely marketed by Suzuki in North America.

In 2006, the Japanese automakers announced an agreement to expand the scope of a deal that also included Suzuki supplying Nissan Alto minicars in Japan.

Nissan’s North American headquarters is in Nashville.

The president of Valero Energy Corp. announced Tuesday that he will resign at the end of the year.

Valero, the largest refiner in North America, operates 17 refineries in the United States, Canada and the Caribbean and has roughly 21,000 employees.

Greg King, 46, will resign effective Dec. 31 after 14 years with the San Antonio-based oil refiner.

Chairman and Chief Executive Officer Bill Klesse said the resignation was unexpected.

King was president since January 2003 and oversaw the financial, administrative and retail divisions. Before that, he was Valero’s chief operating officer beginning in 1999.