If banks continue to merge, their bondholders stand to make some nice
"Generally speaking, in the land of corporate bonds, acquisitions are
But in the banking industry, transactions such as PNC Bank Corp.'s
Higher capital levels often result in bond rating upgrades, a favorable
Better ratings reduce the cost of capital market access for banks, while
Indeed, Moody's Investors Service has been receptive to acquisitions,
"That spells out the rating agency's posture on such acquisitions," said
First Union bonds benefited from Moody's stance, with their spread
Clearly, said analysts, the fixed-income investor could gain from
Indeed, some analysts thought the bonds at various BBB-rated companies
"There will be some halo effect," for other BBB-rated companies, said
Other analysts said that acquisitions have decreased the number of BBB-
Lower-rated banks, for their part, might take advantage of the
"The hint of a potential sale might make a bank's bonds trade through
But, analysts say, most of the BBB-rated companies that are the subject
Part of the reason BBB companies sell to larger banks is because of a
Mr. Leit adds that banks will only raise the money cheaply if they can
Lower-rated companies in and of themselves are not necessarily great
Midlantic, for one, was a good buy because of its relatively high
Midlantic's tangible equity-to-assets ratio was 9.68%. That is much
For capital benefits alone, "There are no screaming buys," said Mr.
Added Mr. Works, "I would never want to strictly recommend a BBB on
Nonetheless, banks like Bank of Boston Corp. and Birmingham, Ala.-based
***
Goldman Sachs & Co. analyst Richard K. Strauss dropped H.F. Ahmanson &
He said Countrywide would benefit from the current interest rate
Mr. Strauss' new rating on Ahmanson is "moderate outperform."