Moody's lifts Providian from junk

Moody's Investors Service said it raised the ratings Providian Financial Corp. (senior to A3) and its subsidiary Providian National Bank (deposits to A2/P-1) in anticipation of the acquisition of Providian by Washington Mutual Inc. on Oct. 1.

The ratings of Washington Mutual are unaffected by this action, and the outlook is stable.

Moody's said the upgrade for Providian's ratings reflects the benefits the acquisition provides to Providian's creditors from Washington Mutual's substantially larger and more diversified earnings base as well as its stronger core funding profile. As a part of the transaction, Providian National Bank will be merged with and into Washington Mutual Bank, with all obligations of Providian National Bank being assumed by Washington Mutual Bank.

The ratings upgraded include Providian National Bank's rating for long-term deposits to A2 from Ba2, short-term deposits to Prime-1 from Not Prime, other senior obligations and issuer rating to A2 from Ba3 and the bank financial strength rating to C+ from D; Providian Financial Corp.'s senior unsecured debt to A3 from B2; and Providian Capital I's trust preferred securities to Baa1 from Caa1.

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