Fitch IBCA has downgraded the debt of Bay View Capital Corp., citing the California banking company's failure to unload the loans acquired last year when it bought a lender to fast-food restaurants, gas stations, and convenience stores.

Bay View officials and two banking analysts expressed surprise at the downgrade, since the $6.4 billion-asset company announced two weeks ago that it had hired Merrill Lynch to explore the possibility of a sale.

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