Loss hits Citigroup credit rating; Fitch cuts

LONDON (Reuters) - Citigroup Inc's (C.N) $5.1 billion first-quarter loss on Friday took its toll on credit ratings, with Fitch Ratings cutting the largest U.S. bank one notch to AA- and warning of further concerns.

Fitch said the bank's rating outlook remained negative, reflecting a difficult U.S. consumer credit environment and continuing concerns over exposure to risky areas such as collateralized debt obligations (CDOs) and leveraged finance.

"Fitch's downgrade stems from a $5 billion after-tax loss recorded in (the) first quarter as well as a challenging financial outlook," the agency said.

The loss is the second in straight quarters for Citigroup, hurt by more than $16 billion in write-downs and increased reserves for credit losses.

Earlier, Moody's Investors Service affirmed Citigroup's ratings but changed the outlook to negative after investment bank charges came in higher than the ratings agency expected.

Moody's said it could downgrade Citigroup -- whose senior unsecured debt is rated Aa3, the fourth-highest investment-grade rating -- if the bank's capital ratios declined further due to continued losses.

Moody's said it had affirmed the bank's ratings as its regulatory capital surplus remained sizeable despite the losses.

"Citigroup's capital position improved noticeably in the past seven months because the company has issued over $30 billion in regulatory capital," the agency said.

(Reporting by Richard Barley; Editing by David Holmes)