S&P Downgrades BoA

Standard & Poor's Ratings Services has lowered its long-term counterparty credit rating on Bank of America Corp. from AA to AA-minus following BoA's agreement to acquire Merrill Lynch. The long-term ratings of its subsidiaries were also lowered one notch, and those on its holding company and bank subsidiaries were placed on CreditWatch with negative implications. S&P also placed its ratings on Merrill Lynch & Co. and all related entities on CreditWatch with developing implications. The rating actions "reflect the risks of acquiring Merrill Lynch in the present turbulent market environment," said S&P credit analyst John Bartko. S&P noted that the acquisition "takes place on the heels of BoA's recent July 1 acquisition of troubled mortgage lender Countrywide Financial Corp. In our view, the purchase of Merrill will place further pressure on BofA's capital, already strained by the Countrywide acquisition." S&P said Merrill will introduce more residential housing risk to BoA, "notably in the form of its sizable holdings of collateralized debt obligations backed by subprime residential mortgage-backed securities." The rating agency can be found online at http://www.standardandpoors.com.