JPMorgan Chase & Co. (JPM) completed it acquisition of The Bear Stearns
Companies, Inc. (BSC) on May 30, 2008. As a result, Fitch Ratings has
upgraded the ratings of BSC and removed them from Rating Watch Positive,
where they were originally placed on March 17. As the direct and sole
owner of BSC, JPM has assumed the capital structure of BSC. It is the
opinion of Fitch that JPM will accord BSC the same managerial and
financial resources that are available to its other wholly-owned
subsidiaries. As such, the ratings of BSC have been aligned with those
of JPM and its subsidiaries.
Following the announcement of the proposed merger, Fitch upgraded the
Issuer Default Ratings (IDRs) for BSC and its subsidiaries, and placed
BSC's IDRs and debt ratings on Rating Watch Positive. These upgrades
acknowledged JPMC's guarantee of all trading obligations and
counterparty transactions of BSC and its subsidiaries, and JPM's
assumption of operational oversight, both effective immediately.
Under the Guaranty Agreement, the Guaranty Period ends 120 days after
the merger has been consummated. Upon termination, the Guaranty ends for
new liabilities, but remains in effect for obligations guaranteed during
the Guaranty Period. The Guaranty did not cover BSC's bond debt and
capital securities. However, these instruments are now components of
JPM's capital structure. It has not been determined, which of these
securities, if any, will be replaced with obligations under JPM's name.
Fitch has upgraded the following ratings and removed them from Rating
Watch Positive:
The Bear Stearns Companies Inc:
--Long-term IDR to 'AA-' from 'A-';
--Short-term IDR to 'F1+' from 'F2';
--Short-term debt to 'F1+' from 'F3';
--Senior debt to 'AA-' from 'BBB';
--Subordinated debt to 'A+' from 'BBB-' ;
--Preferred stock to 'A+' from 'BB+';
--Individual to 'B' from 'F'.
Bear Stearns Securities Corp.:
--Long-term IDR to 'AA-' from 'A-';
--Short-term IDR to 'F1+' from 'F2'.
Custodial Trust Company:
--Long-term IDR to 'AA-' from 'A';
--Long-term deposits to 'AA' from 'BBB+';
--Short-term IDR to 'F1+' from 'F2';
--Short-term deposits to 'F1+' from 'F2';
--Senior debt to 'AA-' from 'BBB';
--Individual to 'B' from 'C';
--Support to '1' from '2'.
Bear Stearns Capital Trust III:
--Trust preferred stock to 'A+' from 'BB+'.
Fitch has also withdrawn the following rating:
The Bear Stearns Companies Inc:
--Support '1'.
The Rating Outlook is Stable for all ratings.
Fitch's rating definitions and the terms of use of such ratings are
available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality, conflicts
of interest, affiliate firewall, compliance and other relevant policies
and procedures are also available from the 'Code of Conduct' section of
this site.
