S&P: Wachovia on watch

Standard & Poor's said that Wachovia Corp. announced that it intends to sell its retail bank, corporate and investment bank, and wealth-management businesses to Citigroup Inc., and the new Wachovia will remain a public company with two main operating subsidiaries: Wachovia Securities and Evergreen Asset Management.

As a result of this transaction, S&P said it placed all its ratings on Wachovia Corp. and Wachovia Bank on Creditwatch with negative implications, including $7.3 billion of trust preferred stock that it expects Citigroup to acquire.

At the same time, S&P said it lowered its counterparty credit rating on Wachovia Corp. to BBB-/A-3 from A+/A-1.

In addition, S&P said it lowered its DRD (dividends received deduction) series J and K preferred stock and series L convertible preferred stock ratings on Wachovia Corp. to BB from A-, as these securities will not be acquired and will continue to reside with the new Wachovia Corp.

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