S&P lifts Wachovia to A+, keeps Wells Fargo on watch

Standard & Poor's said it revised its CreditWatch status on Wachovia Corp. to positive from developing and raised its counterparty credit rating to A+/A-1 from BBB-/A-3 and its series J and K dividends-received-deduction preferred stock and series L convertible preferreds to A- from BB.

The ratings of Wells Fargo & Co. remain on CreditWatch negative, where they were placed Oct. 3.

The revision of Wachovia's CreditWatch status follows Wells Fargo's announcement that it is proceeding with its original plan to acquire all of Wachovia and reflects S&P's expectation that the agreement will indeed close. As a result, S&P returned Wachovia's counterparty credit rating to where it was before the Sept. 29 announcement of Citigroup Inc.'s plan to acquire Wachovia's banking operations.

The agency said that if the transaction with Wells Fargo closes, it could raise the ratings on Wachovia and equalize them to Wells Fargo's ratings. But if the transaction doesn't close, S&P expects the ratings will return to CreditWatch negative, reflecting the agency's expectation of lower core earnings and capital pressures at Wachovia and the possibility of a Citigroup transaction.

Wells Fargo's CreditWatch negative status reflects the uncertainty surrounding core earnings and capital levels after this acquisition closes and the integration issues related to the size and scale of Wachovia relative to Wells Fargo, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.