Add Countrywide Financial Corp. to the list of banks and mortgage lenders who have seen their debt ratings lowered by Fitch Ratings over new concerns about the poor performance of home-equity loans.

Fitch announced Wednesday that it was cutting Countrywide Financial’s long-term issuer default rating two notches, to "BBB-" — the lowest investment-grade category. Fitch took the same action for the company’s subsidiaries, Countrywide Bank and Countrywide Home Loans Inc.

The rationale for the moves — "deterioration within home-equity portfolios and continued pressure on home prices" — was the same given March 7, when Fitch cut the debt ratings of some big name banks, including Washington Mutual, Wells Fargo and National City (see Inman News story).

Fitch analysts said they believe that Bank of America’s decision to purchase Countrywide — a $4 billion deal announced in January — remains on track. If the deal goes through, Countrywide would see its issuer default rating bumped up to Bank of America’s higher "AA" rating, analysts said — although Bank of America’s rating is also on "Rating Watch Negative" for possible downgrade.

Lower credit ratings can mean higher borrowing costs for companies — costs that are passed on to their customers.

Before Bank of America announced its plan to acquire Countrywide, the company warned investors that its future could depend on keeping its investment-grade ratings.

"To retain access to the public debt markets it is critical for us to maintain investment-grade credit ratings," Countrywide officials said in a regulatory filing. "While we retain our investment-grade ratings, all three rating agencies have placed our ratings on some form of negative outlook."


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