Capital: NationsBank Debt in Line For Upgrade by Moody's; Acquisitions

Moody's Investors Service put the ratings of NationsBank Corp. and its banking subsidiaries under review for possible upgrades, in an action some analysts said is overdue.

Moody's said the continued growth in the strength and breadth of NationsBank's franchises prompted its review.

About $46 billion of securities could be affected. Moody's currently rates the corporation's senior debt A2 and its subordinated debt A3. The long-term rating of NationsBank's banking subsidiaries is A1.

The rating agency said a series of acquisitions helped NationsBank evolve from a North Carolina regional into one of the nation's largest banks. The bank's growth in scope has required a change in management style and structure.

As a result, NationsBank now has a series of superregional or nationwide activities, Moody's said.

"It's about time," said John Works, a bank bond analyst at J.P. Morgan & Co. "This has been such an obvious outlier for such a long time. I'm a little puzzled about why Moody's waited so long, but better late than never."

Standard & Poor's changed its long-term outlook on NationsBank debt to "positive" from "stable" in April. Moody's action last week means it could upgrade NationsBank's debt sooner than S&P.

Moody's said that its review will focus on the ability of NationsBank's management to continue to exercise effective control over its growing range of businesses.

The agency also will review the strategies by which the company intends to compete effectively with other large and more established U.S. bank holding companies in its chosen national franchises.

Management's plans for the company's future capital and financial structure also will be examined by the rating agency.

Ratings on review for possible upgrade include NationsBank Corp.'s long- term debt ratings, its counterparty rating of A2, and the (P) a2 rating of its shelf registration for preferred stock.

Also affected are the A2 senior debt and A3 subordinated debt ratings of C&S/Sovran Corp., as well as the A3 long-term subordinated debt rating and the A2 preferred stock rating of MNC Financial Inc.

Moody's also will review its ratings on debt and obligations of NationsBank's main banking subsidiary and several regional banking units.

- Stephen Kleege and Daniel Dunaief

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