BOND SERVICE DOWNGRADES ROYAL, BANK OF MONTREAL
The Canadian Bond Rating Service said
it downgraded ratings for long-term senior debt and
subordinated debentures at <Royal Bank of Canada> and <Bank of
Montreal> due partly to loan loss problems.
    Royal's long-term senior debt was downgraded to A plus
(high) from A plus plus and 1.60 billion dlrs of subordinated
debentures to A plus from A plus plus (low). Bank of Montreal's
senior long-term debt rating fell to A plus (high) from A plus
plus (low) and 1.46 billion dlrs of subordinated debentures to
A plus (low) from A plus.
    The rating service cited continued difficulties among Royal
Bank customers, particularly in the energy industry, a
continued high level of loan losses expected this year and 
relatively high sovereign debt exposure in relation to common
equity.
    It cited Bank of Montreal's below average profitability and
internal capital generation and relatively high international
debt exposure in relation to common equity, although it noted
that loan losses were expected to moderate in 1987.
 Reuter
