S&P places Discover on positive watch

S&P said it placed its ratings for Discover Financial Services, including its BBB- issuer rating, and its Discover Bank on CreditWatch with positive implications.

“The CreditWatch placement follows the announcement that Capital One will acquire Discover, which had $151.5 billion of assets as of Dec. 31, 2023. The all-stock transaction, valued at $35.5 billion, would result in about a 27% premium for Discover shareholders, who will own approximately 40% of the combined company at close. We expect that Discover will sell its student loan operations prior to the close of the acquisition (Discover ceased originations on Feb. 1),” the agency said in a press release.

S&P said it could raise Discover’s ratings a notch to the same level as Capital One Financial Corp.’s ratings.

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