Rating Agencies Downgrade Debt of CalFed, Great Western

Major rating agencies on Friday downgraded debt of two major California thrifts, CalFed Inc. and Great Western Financial, citing concerns about their commercial real estate loans.

The actions show how Standard & Poor’s Corp. and Moody’s Investors Service are increasingly worried about real estate portfolios held by California banks and thrifts, even though the institutions downplay the problems. The real estate debate in California has grown louder the past month amid spreading problems in New England, Florida and the New York area.

In one action, S&P; downgraded about $1 billion in debt of Great Western Financial and an overseas finance unit, but affirmed ratings for its Great Western Bank subsidiary. It also said that Great Western’s exposure to commercial real estate is limited, but further deterioration is possible. The downgrade affected such debt as Great Western Financial’s senior debt, lowered from A to A-.

Beverly Hills-based Great Western said it was disappointed at the action but pleased that S&P; upheld ratings for the subsidiary. Standard & Poor’s earlier this month downgraded some Great Western debt.

Separately, Moody’s downgraded debt at CalFed and its California Federal Bank subsidiary. Los Angeles-based CalFed said about $525 million in long-term debt would be affected, including California Federal Bank’s senior debt, lowered from BAA2 to BAA3.

In a statement, CalFed Chairman Jerry St. Dennis called the Moody’s decision “especially disappointing” coming amid the thrift’s recent improved performance. CalFed said the decision reflects Moody’s general pessimism about California real estate.

A lower rating makes it more expensive to raise money by issuing debt. In New York Stock Exchange trading Friday, Great Western’s stock rose 25 cents per share to close at $18.75, while CalFed fell 25 cents per share to end at $17.625.