S&P raises Countrywide, Fitch keeps on review
July 1st, 2008 | by admin |NEW YORK, July 1 (Reuters) - Standard & Poor’s on Tuesdayraised its ratings on Countrywide Financial Corp. after thelargest U.S. mortgage lender was acquired by Bank of America(BAC.N: Quote, Profile, Research, Stock Buzz).
S&P raised Countrywide’s counterparty rating to “AA,” thethird-highest investment-grade level, from the highest junklevel of “BB-plus” to align it with ratings of Bank of America.The upgrade reflects expectations that Bank of America willhonor Countrywide’s debt, S&P said in a statement.
Rival rating agency Fitch Ratings said the takeover waspositive for Countrywide creditors, but it kept its “BBB-minus”rating on review until details of the new corporate structureare announced.
Fitch said the latest regulatory filing by Bank of Americaleft open the possibility that Countrywide’s debt could remainthe obligation of the mortgage lender, not Bank of America.
In that case, Countrywide’s debt rating could be downgradedfrom its current level and would remain below Bank of America’srating. But if Bank of America guarantees Countywide’s debt,ratings could be equalized, Fitch said.
Countrywide had $97.23 billion of outstanding debt as ofDec. 31, including Federal Home Loan Bank advances toCountrywide Bank of about $47.68 billion.
Charlotte, North Carolina-based Bank of America completedits acquisition of Countrywide on Tuesday. For details click on[ID:nN01486703].
The deal makes Bank of America the No. 1 mortgageoriginator and mortgage servicer in the United States,according to S&P.
S&P said the outlook, which indicates the likely directionof the rating over the next two years, is negative because ofcontinued weakness in Bank of America’s now expanded mortgageportfolio and credit card book.
