Fitch Affirms Countrywide's 'A'

Fitch Ratings has affirmed Countrywide Financial Corp.'s long-term issuer default rating of "A" and short-term issuer rating of "F1," the rating agency said last month.

The ratings affect approximately $34 billion of debt and $57.5 billion of deposits.

The ratings reflect Countrywide's leadership in the mortgage banking industry, good financial performance amid sector weakness, and diverse funding profile augmented by deposit growth at Countrywide Bank FSB, Fitch said.

The rating agency also said that Countrywide's "macro-hedge" strategy, relying on mortgage servicing to offset cyclical slowdowns in loan origination volume, has "delivered consistent operating performance over multiple cycles."

However, Fitch noted that Countrywide had to take writedowns because of higher-than-expected credit losses and weakness in the subprime market. Fitch said it expects the remainder of this year to "continue to be challenging," which will put pressure on Countrywide's operating performance.

But Fitch said it expects Countrywide to benefit from long-term industry "rationalization" as some subprime specialty lenders exit the business.

Fitch noted that Countrywide is in the early stages of integrating Countrywide Home Loans into Countrywide Bank to lower funding costs and reduce its reliance on unsecured debt markets.

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