S&P Downgrades WaMu to D

Standard & Poor's Ratings Services has downgraded its counterparty credit rating and senior unsecured debt ratings on WaMu from CCC to D. S&P also downgraded its subordinated debt and preferred stock ratings on WaMu from CC to D. JPMorgan Chase & Co. (rated AA-minus/Negative/A-1-plus by S&P) has agreed to acquire all of Washington Mutual Bank's deposits, so the rating agency said it has upgraded the uninsured deposit rating on WaMu Bank from BBB-minus/A-3 to AA-minus/A-1-plus. However, JPM did not acquire the bank's senior and subordinated debt, so those debts reside in the Federal Deposit Insurance Corp. receivership, S&P noted. Therefore, the counterparty credit rating on WaMu Bank was downgraded from BBB-minus to R and the senior unsecured debt and subordinated debt ratings on the bank were downgraded from BBB-minus and BB-plus, respectively, to D, signifying regulatory intervention. "These rating actions stem from the bank's placement in FDIC receivership and its simultaneous sale to JPM," explained S&P credit analyst Victoria Wagner. "As a result of the bank's receivership status, we expect the holding company to file bankruptcy."