NEW YORK, July 1 (Reuters) - Standard & Poor's on Tuesday raised its ratings on Countrywide Financial Corp. after the largest U.S. mortgage lender was acquired by Bank of America (BAC.N: Quote, Profile, Research).
S&P raised Countrywide's counterparty rating to "AA," the third-highest investment-grade level, from the highest junk level of "BB-plus" to align it with ratings of Bank of America. The upgrade reflects expectations that Bank of America will honor Countrywide's debt, S&P said in a statement.
Rival rating agency Fitch Ratings said the takeover was positive for Countrywide creditors, but it kept its "BBB-minus" rating on review until details of the new corporate structure are announced.
Fitch said the latest regulatory filing by Bank of America left open the possibility that Countrywide's debt could remain the obligation of the mortgage lender, not Bank of America.
In that case, Countrywide's debt rating could be downgraded from its current level and would remain below Bank of America's rating. But if Bank of America guarantees Countywide's debt, ratings could be equalized, Fitch said.
Countrywide had $97.23 billion of outstanding debt as of Dec. 31, including Federal Home Loan Bank advances to Countrywide Bank of about $47.68 billion.
Charlotte, North Carolina-based Bank of America completed its acquisition of Countrywide on Tuesday. For details click on [ID:nN01486703].
The deal makes Bank of America the No. 1 mortgage originator and mortgage servicer in the United States, according to S&P.
S&P said the outlook, which indicates the likely direction of the rating over the next two years, is negative because of continued weakness in Bank of America's now expanded mortgage portfolio and credit card book.
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