Bank of America??s credit rating was cut for the second time in three months Tuesday, amid concerns that the weakening economy and the acquisition of Merrill Lynch will hurt the bank??s earnings.
??We downgraded BofA one notch because we believe that the economic weakness will persist and that, in turn, earnings pressure for Bank of America will be more intense than we anticipated as recently as December 19? when the bank??s rating was last cut, John Bartko, analyst at Standard & Poor??s, said.
The rating agency said BofA??s creditworthiness had deteriorated because the bank??s exposure to assets such as consumer credit had approached or exceeded stress tests S&P used in December.
The agency said further writedowns associated with BofA??s acquisitions of Countrywide and Merrill Lynch were also a possibility.
S&P lowered BofA??s counterparty credit rating from A+ to A, with a negative outlook.
??We see some potential for earnings to be substantially worse than we now expect, making further government assistance a potential development,? Mr Bartko said.
