Given that Fitch is implicitly admitting that it is making rating...

Given that Fitch is implicitly admitting that it is making rating decisions not on merit alone, but on perceived implications of what a rating change might do to the company being rated (see Any Credibility Left At Fitch?) what does Countrywide Financial have to lose by pleading downgrade could weaken business? BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? Given that Fitch is implicitly admitting that it is making rating decisions not on merit alone, but on perceived implications of what a rating change might do to the company being rated (see Countrywide (CFC), the largest U. S. mortgage lender, said in a U. S. regulatory filing on Friday, that if its credit rating dropped below its current lowest rating, this would 'severely,' limit its access to the public corporate debt market and that could have repercussions on its business. A below investment-grade rating also would mean Countrywide would face more restrictive terms and higher rates when it renegotiated or refinanced its existing borrowings, the company said in a U. S. Securities and Exchange Commission filing. 'While we retain our investment grade ratings, all three rating agencies have placed our ratings on some form of negative outlook,' the company said in the filling. Additionally, a below investment-grade rating also could affect the company's bank subsidiary's ability to capture custodial deposit accounts on deposit. 'As of September 30, 2007, up to $5.5 billion of our custodial deposits may be subject to placement with another bank if our credit ratings were reduced below investment grade,' Countrywide said in the filing. Here is the implied message: Moody's Fitch, and the S&P please do not downgrade our debt. If you do it will impact our business. 'Fitch recognizes that financial guarantors view maintenance of their 'AAA' ratings as a core part of their business strategies, and management teams will take any reasonable actions to avoid a downgrade'. With that in mind, it seems that Countrywide just has to win over Moody's or the S&P. Of course when things deteriorate badly enough, all three rating agencies will be forced on board the debt downgrade train whether they like it or not. The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.