Moody's affirmed the A2 issuer and senior unsecured regular bond/debenture ratings of MUFG Americas Holdings Corp. and its bank unit, MUFG Union Bank NA, and the Aa2 long-term deposit rating of MUFG Union Bank.
The ratings outlook was revised to negative from stable.
The bank's baseline credit assessment of a2 and adjusted baseline credit assessment of a1 were also affirmed.
The rating agency said its affirmation of the a2 baseline credit assessment reflects its unchanged assessment of MUFG Americas Holdings' stand-alone credit assessment, supported by strong asset quality and capitalization, though the company remains challenged by its profitability that is "well below" U.S. peers and a higher amount of confidence-sensitive wholesale funding, resulting in high refinancing risk.
Moody's added that capitalization has been a "long-standing strength" of the company and attributes it to the private ownership and modest shareholder distributions. The rating agency said the company's key credit challenge remains its below-peer average profitability, which was the driver of the outlook change to negative.
Mitsubishi UFJ Financial Group Inc. is the parent company of MUFG Americas Holdings.