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NEW YORK (AP) -- Credit rating agency Standard & Poor's said Monday it placed Citigroup Inc. and its operating unit Citibank N.A. on negative credit watch after the company said over the weekend it would take an additional $8 billion to $11 billion in writedowns. A negative credit watch means Citigroup's credit rating has a 50 percent chance of being lowered in the next three months. Citigroup currently carries a "AA" long-term counterparty credit rating, while Citibank has a "AA+" rating. Both are investment grade. The magnitude of Citigroup's writedowns call into question the bank's risk management practices and deteriorating credit conditions in consumer lending, meaning the bank will likely "face a difficult environment across a number of fronts in the short to medium term," S&P said in a statement. The writedowns are tied to exposure to complex instruments known as collateralized debt obligations. CDOs combine slices of different kind of risk; many include pieces of bonds backed by subprime mortgages -- loans given to customers with poor credit history. As those mortgages have gone into default at rising rates, banks have been forced to slash the value of the CDOs. The fourth-quarter writedowns follow $6.5 billion in writedowns of the value of credit-related holdings in the third quarter. Fitch Ratings went a step further than S&P Monday morning, cutting Citigroup's rating to "AA" from "AA+," and placing a negative outlook on the New York-based banking company. Shares of Citigroup fell $1.49, or 4 percent, to $36.24 in morning trading. They hit a year low of $35.60 earlier in the session.
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