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BofA rethinking Countrywide merger

Countrywide's corporate debt rating slashed to junk

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...