Shares of Marshall & Ilsley slip after Fitch places debt ratings on negative watch

Marshall & Ilsley shares down after Fitch watch

NEW YORK — Shares of banking company Marshall & Ilsley Corp. were down Wednesday, after Fitch Ratings put the banking holding company’s debt ratings on negative watch citing elevated loan losses.

Shares of Marshall & Ilsley were down 17 cents, or nearly 3 percent, to $6.35.

The watch applied to the issuer default rating and debt ratings of Marshall & Ilsley and its subsidiary banks. The long- and short-term issuer default ratings at the company and its subsidiary banks are BBB+ and F2, respectively.

In a note to investors Tuesday, Fitch analyst John Mackery noted that Marshall & Ilsley has sold about $1.6 billion of problem loans since first quarter of 2008

He wrote that the company’s challenges largely stem from its construction and land development portfolio, especially in hard hit Arizona.

Mackery wrote that Fitch is evaluating loan quality indicators to determine if Marshall & Ilsley has taken sufficient measures to stem the tide of new problem loans.

A downgrade is likely if Fitch finds that the company’s asset quality isn’t expected to stabilize soon, Mackery wrote.

He said ratings aren’t expected to be downgraded below investment grade. The review should be complete before the end of the third quarter.