DBRS Eyes BoA

DBRS has placed all ratings of Bank of America Corp., its lead bank, Bank of America NA, and related entities Under Review with Negative Implications in the wake of the Merrill Lynch deal. BoA's issuer and senior debt rating is AA (low). "While this acquisition may yield substantial strategic benefits to Bank of America over the long term, it also involves significant risks," DBRS said. The rating agency also placed all ratings for Merrill and related entities Under Review with Developing Implications. DBRS said Merrill's investment banking and other business lines are performing well, with several producing record revenues. By acquiring Merrill, BoA is "paying a premium over book value to gain a valuable franchise," DBRS said. ".... However, the company will not likely be able to realize the full benefits of this transaction until financial markets stabilize. DBRS does not expect this recovery to occur in the short term." Meanwhile, Merrill's "significant exposure" to asset-backed securities, collateralized debt obligations, residential real estate, and certain other assets presents a risk of "potentially large further losses," DBRS said. The rating agency can be found online at http://www.dbrs.com.