NEW YORK, NY--Standard & Poor's Ratings Services has lowered its ratings on Countrywide Financial Corp. and Countrywide Home Loans Inc. to 'BB+/B' from 'BBB+/A-2'. We also lowered our rating on Countrywide Bank fsb to 'BBB/A-2' from 'A-/A-2'. Countrywide is headquartered at Calabasas, CA.
The rating actions were due to the disclosure in Bank of America Corp.'s (BAC) May 1 Form S-4/A filing relating to the terms of the merger between BAC and Countrywide and a new reference regarding the treatment of Countrywide's indebtedne.png)
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ss. All of our ratings on Countrywide are now on CreditWatch Developing, a revision from CreditWatch Positive (where they were placed Jan. 11, 2008) due to the new level of uncertainty as to the ultimate lega
l status of Countrywide's creditors after the merger.
l status of Countrywide's creditors after the merger.As recently as April 30, 2008, we issued a CreditWatch update on Countrywide indicating that our sensing a change in the status of this merger agreement would result our downgrading Countrywide several notches.
The filing indicates that it is now possible that BAC would not support some of Countrywide's debt, including the approximately $17 billion of medium-term notes, $4 billion of convertible debt, $2.2 billion junior subordinated debt, and $1 billion of subordinated debt currently outstanding.
There is also langu
age in the filing indicating that Countrywide will be merged with and into a merger subsidiary that will remain wholly owned by BAC, and assurances from BAC to Countrywide's common shareholders that they will receive common dividends.
age in the filing indicating that Countrywide will be merged with and into a merger subsidiary that will remain wholly owned by BAC, and assurances from BAC to Countrywide's common shareholders that they will receive common dividends. Until this filing it was our understanding that BAC would acquire all of Countrywide as stated in the January 2008 merger agreement. This new filing raises the possibility that this assumption is no longer true.
Media Contact:
Jeff Sexton
(212) 438-1280
jeff_sexton@standardandpoors.com
Analyst Contacts:
Victoria Wagner, New York (1) 212-438-7406
Daniel E Teclaw, New York (1) 212-438-8716
John K Bartko, C.P.A., New York (1) 212-438-7368
Analyst Contacts:
Victoria Wagner, New York (1) 212-438-7406
Daniel E Teclaw, New York (1) 212-438-8716
John K Bartko, C.P.A., New York (1) 212-438-7368
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