Moody’s cuts New York Community Bancorp’s credit rating to junk

Moody’s Investors Services downgraded New York Community Bancorp’s credit rating by two grades, to “junk,” late Tuesday.

NYCB is facing  “financial, risk-management and governance challenges,” Moody’s said, adding that it could downgrade the company’s rating even further if conditions deteriorate.

Earlier Tuesday, NYCB shares
NYCB,
-22.22%

plunged 22% to close at their lowest level since 1997, and fell an additional 17% in after-hours trading. The stock has slumped about 60% since the bank posted a surprise quarterly loss last week, and disclosed trouble with its commercial real-estate loans. The company also slashed its dividend to build up capital to meet regulatory requirements.

Also Tuesday, Treasury Secretary Janet Yellen told lawmakers on Capitol Hill that she was “concerned” about risks to the commercial real-estate market, noting that “there may be some institutions that are quite stressed by this problem.”