Moody's Investors Service and Standard & Poor's Ratings Group raised their ratings on First Fidelity Bancorp. following the merger with First Union Corp.
Moody's raised First Fidelity's long-term senior debt to A1 from A2, and the long-term subordinated debt to A2 from A3.
Additionally, Moody's raised First Union's long term debt to A1 from A2 and its subordinated rating to A2 from A3.
Meanwhile, S&P confirmed its A rating on First Union's senior debt and its A-minus on its subordinated debt, while raising First Fidelity's senior debt to A from A-minus, and its subordinated debt to A-minus from BBB-plus.
"The upgrades were based on the broader geographic scope and larger scale of businesses of the combined entity, compared with either institution viewed alone," said Moody's.
Sounding a cautionary note, S&P said that the merger, the largest to date for First Union, may present operational challenges. Nonetheless, the rating agency cited the company's considerable experience acquiring and integrating numerous banks over the past decade.