S&P cut the long-term counterparty credit rating of the bank to “A” from A+”” and affirmed its “A-1” short-term ratings. Other changes are as follows:
- lowered its ratings on B of A’s bank subsidiaries to “A+/A-1” from “AA-/A-1+” lowered
- lowered B of A’s hybrid rating to “BB-” from “BBB”
- lowered the hybrid ratings on the bank subsidiaries to “BB” from “BBB+”
S&P has affirmed its ‘AAA’ rating on the FDIC-guaranteed debt of B of A and its subsidiaries. As far as the outlook, S&P has said that the outlook of B of A and its bank subsidiaries remains negative.
As part of the note, S&P said, “B of A’s creditworthiness has deteriorated given its exposure to consumer credit and more generally to various asset types that have approached–and, in certain instances, exceeded–the stress tests we used as a basis for our Dec. 19, 2008, sector review of large complex banks and brokers…. Our ratings on BofA consider a material weakening in the operating environment leading to declines in earnings. Further write-downs associated with the Countrywide and Merrill Lynch acquisitions are also a possibility.”
S&P also now expects less than the original target of a 50% to 75% of normal earnings run rates. The S&P note also sees substantial downside to its own expectations for earnings. Interestingly enough, B of A stock is still up about 1% at $3.67 today.
JON C. OGG
MARCH 3, 2009
Top Gaining Stocks
Top Losing Stocks