Fitch places Countrywide on "Evolving" rating watch

NEW YORK—Credit ratings agency Fitch Ratings on Monday placed all of Countrywide Financial Corp.'s ratings on an "evolving" watch.

The ratings were previously on a "positive" watch.

The change reflects uncertainty surrounding how Countrywide's current debt will be treated once the acquisition of the nation's mortgage lender is completed by Bank of America Corp. In a regulatory filing Thursday, Bank of America left open the possibility that it would not cover outstanding debt when Countrywide is acquired.

An evolving watch means the company could be upgraded or downgraded. Countrywide currently carries a long-term issuer default rating of "BBB-," one notch above junk status. Depending on the terms of the completed deal, its rating could be raised to match Bank of America's at "AA." The rating would likely be cut if deal is not completed, Fitch said in a statement.

Fitch expects the deal will be completed but is unsure of the final terms.

In January, Charlotte, N.C.-based Bank of America agreed to purchase Calabasas, Calif.-based Countrywide for about $4 billion in stock. The deal is expected to close during the third quarter.

Shares of Countrywide fell 70 cents, or 11.7 percent, to $5.28. Bank of America shares fell 63 cents to $39.16.