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BofA rethinking Countrywide merger

Countrywide's corporate debt rating slashed to junk
Published on May 5, 2008

Bank of America may back out of its planned acquisition of Countrywide Financial Corp. if it can't negotiate a better deal, analysts said after Bank of America revealed that it might merge the troubled lender into a subsidiary and not guarantee all of Countrywide's corporate debt. Bank of America officials disclosed in a May 1 regulatory filing that they have not decided whether they will honor more than $24 billion in Countrywide debt. Analysts at Standard & Poor's Ratings Services cut Countrywide's corporate debt rating to junk the next day. Charlotte, N.C.-based Bank of America says it still intends to complete the acquisition in the third quarter, but also revealed Countrywide could be merged into a subsidiary rather than acquired in whole by Bank of America -- news that also surprised analysts at the rating agency. Analysts at Standard & Poor's Equity Research say they expect the deal will go through, but at a reduced price, Reuters reported. A Friedman, B...

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