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Related Issuers
BAC AAH Capital Funding LLC I
BAC AAH Capital Funding LLC II
BAC AAH Capital Funding LLC III
BAC AAH Capital Funding LLC IX
BAC AAH Capital Funding LLC V
BAC AAH Capital Funding LLC VI
BAC AAH Capital Funding LLC VII
BAC AAH Capital Funding LLC VIII
BAC AAH Capital Funding LLC X
BAC AAH Capital Funding LLC XI
BAC AAH Capital Funding LLC XII
BAC AAH Capital Funding LLC XIII
BAC AAH Capital Funding LLC XIV
BAC AAH Capital Funding LLC XIX
BAC AAH Capital Funding LLC XV
BAC AAH Capital Funding LLC XVI
BAC AAH Capital Funding LLC XVIII
BAC Capital Trust I
BAC Capital Trust II
BAC Capital Trust III
BAC Capital Trust IV
BAC Capital Trust IX
BAC Capital Trust V
BAC Capital Trust VI
BAC Capital Trust VII
BAC Capital Trust VIII
BAC Capital Trust X
BAC Capital Trust XI
BAC Capital Trust XII
BAC Capital Trust XIII
BAC Capital Trust XIV
BAC Capital Trust XIX
BAC Capital Trust XV
BAC Capital Trust XVI
BAC Capital Trust XVII
BAC Capital Trust XVIII
BAC Capital Trust XX
BAC LB Capital Funding LLC I
BAC LB Capital Funding LLC II
BAC North America Holding Company
Banc of America Preferred Funding Corp.
Bank of America Corporation
Bank of America, N.A.
BankAmerica Capital I
BankAmerica Capital II
BankAmerica Capital III
BankAmerica Institutional Capital A
BankAmerica Institutional Capital B
BankBoston Capital Trust III
BankBoston Capital Trust IV
BankBoston Corporation
Barnett Banks, Incorporated (Old)
Barnett Capital Trust III
Countrywide Capital III
Countrywide Capital IV
Countrywide Capital V
Fleet Capital Trust II
Fleet Capital Trust IX
Fleet Capital Trust V
Fleet Capital Trust VII
Fleet Capital Trust VIII
LaSalle National Corporation
MBNA Capital A
MBNA Capital B
MBNA Capital C
MBNA Capital D
MBNA Capital E
MBNA Capital F
MBNA Capital G
Merrill Lynch Bank & Trust Company
Merrill Lynch Bank USA
Merrill Lynch Capital Trust I
Merrill Lynch Capital Trust II
Merrill Lynch Capital Trust III
Merrill Lynch Preferred Capital Trust III
Merrill Lynch Preferred Capital Trust IV
Merrill Lynch Preferred Capital Trust V
Merrill Lynch Preferred Capital Trust VI
Merrill Lynch Preferred Funding I, L.P.
Merrill Lynch Preferred Funding II, L.P.
Merrill Lynch Preferred Funding III, L.P.
Merrill Lynch Preferred Funding IV, L.P.
Merrill Lynch Preferred Funding V, L.P.
Merrill Lynch Preferred Funding VI, L.P.
NB Capital Trust I
NB Capital Trust II
NB Capital Trust III
NB Capital Trust IV
NB Capital Trust V
Shawmut National Corporation
Summit Bancorp
Rating Action:

Moody's reviews BofA's financial strength rating for upgrade

14 May 2009

Rating outlooks on hybrid securities no longer negative

New York, May 14, 2009 -- Moody's Investors Service today put on review for possible upgrade the D bank financial strength rating (BFSR) of the U.S. bank subsidiaries of Bank of America Corporation (BAC). The rating agency also changed the ratings outlook on BAC's non-cumulative preferred securities to developing from negative, and changed the outlook on the BAC's junior subordinated trust preferred securities to stable from negative. All other ratings of BAC and its subsidiaries (holdco senior unsecured at A2, bank deposits at Aa3) were affirmed with a stable outlook.

These actions had no impact on the ratings of the FDIC-guaranteed debt issued by BAC and its lead bank subsidiary, which remain at Aaa with a stable outlook.

"The review of the BFSR reflects our view that BAC's capital raising initiatives, if successful, should strengthen BAC's capital position without impairing BAC's franchise or future earnings power," said Moody's Senior Vice President, David Fanger. BAC's capital raising initiatives are being undertaken in response to the U.S. government's Supervisory Capital Assessment Program (SCAP). Moody's will focus on the likelihood that BAC will succeed in its efforts during the review.

"By strengthening BAC's tangible common equity position, the proposed capital increase would reduce the likelihood of the U.S. government needing to provide additional capital support to BAC. The BFSR is intended to express an opinion about the likelihood of such an event," explained Mr. Fanger.

In reponse to BAC's capital raising initiatives, Moody's also changed the rating outlook on BAC's preferred stock and trust preferred securities. The outlook on BAC's B3 preferred stock rating was changed to developing from negative. "The previous negative outlook reflected the risk that BAC could suspend preferred dividends or even offer a distressed exchange to preferred shareholders in order to boost its common equity position, said Mr. Fanger. We believe that BAC's capital raising initiatives, if successful, should reduce that risk." The developing outlook reflects the remaining uncertainty regarding BAC's ability to avoid a dividend omission or distressed exchange while the capital raising initiatives are still pending.

The outlooks on BAC's junior-subordinated-backed trust preferred securities, rated Baa3, and BAC's Hybrid Income Trust Securities (HITS), rated Ba3, were changed to stable from negative. Similar to the preferred stock, the previous negative outlook on the ratings of these instruments also reflected the risk of a dividend deferral or distressed exchange, although their higher ratings also reflected Moody's view that this risk was more remote than for BAC's preferred stock. The inclusion of new common equity issuance and asset sale gains in BAC's capital raising initiatives makes it more unlikely that BAC will need to defer dividends on, or seek conversion of, its junior subordinated-backed trust preferred securities or the HITS. In light of this, Moody's believes that a stable outlook is now more appropriate for the ratings on these securities.

Although the capital raising should improve BAC's capital position, Moody's noted that BAC continues to face significant challenges stemming from the current economic environment, as well as the ongoing integration of Merrill Lynch. "After loan loss provisions, Moody's does not expect Bank of America to generate sizable earnings until the second half of 2010 at the earliest," Mr. Fanger noted. Higher unemployment, a weak U.S. economy, and challenging real estate markets are likely to contribute to a rise in delinquent and problem loans, most notably in credit cards, residential mortgages, and commercial real estate loans. This will require significant additional loan loss provisions in 2009 and into 2010. "The bank's decision to end negotiations to acquire asset protection from the U.S. government on a pool of $118 billion in legacy capital markets assets also leaves it more exposed to adverse developments in the capital markets," Mr. Fanger added. Until there is greater clarity on the economic outlook and the likely future trends in BAC's asset quality, these challenges are likely to limit the extent of any upgrade of BAC's BFSR.

At the same time, Moody's affirmed the ratings for BAC's deposits, senior debt and senior subordinated debt, which continue to have a stable outlook. Those ratings are based on Moody's expectation of very high systemic support for these instruments, and the view that such support will enable the substantial value of BAC's franchise to materialize in the medium to long-term.

Today's rating actions are consistent with Moody's recent announcement that it is recalibrating some of the weights and relative importance attached to certain rating factors within its current bank rating methodologies. Capital adequacy, in particular, takes on increasing importance in determining the BFSR in the current environment. Meanwhile, debt and deposit ratings will reflect the fact that Moody's expects that its support assumptions will continue to increase for systemically important institutions during this global financial crisis. (Please see Moody's special comment "Calibrating Bank Ratings in the Context of the Global Financial Crisis")

The last rating action on BAC was on March 25, 2009, when Moody's lowered BAC's senior unsecured debt rating to A2 from A1. The last rating action on BAC Capital Trust XII and BAC Capital Trust XIV was on April 24, 2009, when Moody's lowered the ratings on the HITS to Ba3 from Baa3.

The principal methodologies used in rating this issuer were "Bank Financial Strength Ratings: Global Methodology" (February 2007) and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology" (March 2007), which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Credit Policy & Methodologies directory.

The following ratings and outlooks were affected:

Bank of America, N.A., Merrill Lynch Bank & Trust Company, and Merrill Lynch Bank USA:

....Bank Financial Strength Rating Placed on Review for Possible Upgrade, currently D

....Outlook Changed To Rating Under Review From Stable(m)

Outlook Changed To Developing From Negative for the Following Issuers:

BAC AAH Capital Funding LLC I

BAC AAH Capital Funding LLC II

BAC AAH Capital Funding LLC III

BAC AAH Capital Funding LLC IV

BAC AAH Capital Funding LLC IX

BAC AAH Capital Funding LLC V

BAC AAH Capital Funding LLC VI

BAC AAH Capital Funding LLC VII

BAC AAH Capital Funding LLC VIII

BAC AAH Capital Funding LLC X

BAC AAH Capital Funding LLC XI

BAC AAH Capital Funding LLC XII

BAC AAH Capital Funding LLC XIII

BAC AAH Capital Funding LLC XIV

BAC AAH Capital Funding LLC XIX

BAC AAH Capital Funding LLC XV

BAC AAH Capital Funding LLC XVI

BAC AAH Capital Funding LLC XVIII

BAC LB Capital Funding LLC I

BAC LB Capital Funding LLC II

BAC North America Holding Company

Banc of America Preferred Funding Corp.

BankBoston Corporation

Barnett Banks, Incorporated (Old)

LaSalle National Corporation

Shawmut National Corporation

Summit Bancorp

Outlook Changed To Stable From Negative for the Following Issuers:

BAC Capital Trust I

BAC Capital Trust II

BAC Capital Trust III

BAC Capital Trust IV

BAC Capital Trust IX

BAC Capital Trust V

BAC Capital Trust VI

BAC Capital Trust VII

BAC Capital Trust VIII

BAC Capital Trust X

BAC Capital Trust XI

BAC Capital Trust XII

BAC Capital Trust XIII

BAC Capital Trust XIV

BAC Capital Trust XIX

BAC Capital Trust XV

BAC Capital Trust XVI

BAC Capital Trust XVII

BAC Capital Trust XVIII

BAC Capital Trust XX

BankAmerica Capital I

BankAmerica Capital II

BankAmerica Capital III

BankAmerica Institutional Capital A

BankAmerica Institutional Capital B

BankBoston Capital Trust III

BankBoston Capital Trust IV

Barnett Capital Trust III

Countrywide Capital III

Countrywide Capital IV

Countrywide Capital V

Fleet Capital Trust II

Fleet Capital Trust IX

Fleet Capital Trust V

Fleet Capital Trust VII

Fleet Capital Trust VIII

MBNA Capital A

MBNA Capital B

MBNA Capital C

MBNA Capital D

MBNA Capital E

MBNA Capital F

MBNA Capital G

Merrill Lynch Capital Trust I

Merrill Lynch Capital Trust II

Merrill Lynch Capital Trust III

Merrill Lynch Preferred Capital Trust III

Merrill Lynch Preferred Capital Trust IV

Merrill Lynch Preferred Capital Trust V

Merrill Lynch Preferred Capital Trust VI

Merrill Lynch Preferred Funding I, L.P.

Merrill Lynch Preferred Funding II, L.P.

Merrill Lynch Preferred Funding III, L.P.

Merrill Lynch Preferred Funding IV, L.P.

Merrill Lynch Preferred Funding V, L.P.

Merrill Lynch Preferred Funding VI, L.P.

NB Capital Trust I

NB Capital Trust II

NB Capital Trust III

NB Capital Trust IV

NB Capital Trust V

New York
David Fanger
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Robert Young
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's reviews BofA's financial strength rating for upgrade
No Related Data.
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