Standard & Poor's Corp. upgraded the rating on Continental Bank Corp. and its units following the completion of its merger with BankAmerica Corp.
The upgrade, S&P said, reflects the company's improved creditworthiness as part of the much larger California bank.
"This transaction allows Continental to draw upon the considerable financial and managerial resources of the $187 billion BankAmerica," S&P said.
"As part of the larger organization, Continental will be better able to compete in its targeted business banking markets. BankAmerica can provide the Chicago, Ill.-based bank with a broader range of financial products for its corporate and Midwest commercial middle-market client base."
While the acquisition is largely debt financed, it is also largely manageable. Future upgrades will depend on the bank rebuilding tangible capital, S&P said.
Continental's BB preferred stock has been exchanged for BankAmerica's BBB+ preferred stock.
And the agency raised its A-3 rating on Continental's outstanding commercial paper to A-1, but then withdrew the rating because the bank will no longer issue the paper.
Moody's Investors Service has had Continental's ratings under review for possible upgrade since the company announced its merger plans last January, but has yet to make a decision.
Moody's has a Baa3 rating on the company's long-term debt, and a P-3 rating on its commercial paper, or short-term debt.