Countrywide Rating Cut to 'Junk' by S&P
Countrywide Financial Corp.'s credit rating was cut to junk on Friday by Standard & Poor's rating, after a regulatory filing called into question whether Bank of America would repay the troubled lender's outstanding debt after their planned merger.
According to a Securities and Exchange Commission filing, Countrywide currently has $97.2 billion in debt as of Dec. 31, 2007. From the debt the lender currently has, around$11.48 billion consists of credit facilities that will be paid off once the merger is closed.
Standard & Poor lowered its ratings on Countrywide Financial Corp. and Countrywide Home Loans Inc. to BB+/B from BBB+/A-2 and Countrywide Bank to BBB/A-3 from A-/A-2.
The rating agency noted Bank of America's May 1 filing which said it was evaluating alternatives for the disposition of the remaining Countrywide indebtedness, including allowing it to remain outstanding as obligations of Countrywide (and not Bank of America).
Bank of America, the second-largest U.S. bank by assets, agreed in January to buy Countrywide, the largest U.S. mortgage lender.
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