Moody's lifts Wachovia preferreds to A3

Moody's Investors Service said it upgraded its preferred stock rating on Wachovia Corp. to A3 from Ba3 and affirmed its Prime-1 short-term ratings.

The long-term debt and deposit ratings were removed from review, direction uncertain, and placed on review for possible upgrade. The B financial strength rating was removed from review for possible downgrade and placed on review for possible upgrade.

The rating actions follow the announcement that Wells Fargo has signed a definitive agreement to acquire Wachovia and assume all its debt obligations.

Last week, Moody's severely downgraded the preferreds after Citigroup, Inc. announced its intention to acquire the bank and thrift assets and liabilities of Wachovia and its senior and subordinated debt but not its preferred securities, raising the possibility that the preferreds would be part of the capital structure in a highly leveraged entity.

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