Wachovia Corporation Downgraded

Thomson Financial BankWatch downgraded ratings for Wachovia Corporation. The ratings are: Wachovia Corporation (Winston-Salem, North Carolina) Short-Term Debt Rating Affirmed at TBW-1 Subordinated Debt Rating Downgraded to AA- from AA Wachovia Bank, N.A. Short-Term Debt Rating Affirmed at TBW-1 Senior Debt Rating Downgraded to AA+ from AAA Subordinated Debt Rating Downgraded to AA from AA+ Earlier this month, Wachovia Corporation announced that it expects more moderate revenue and net earnings growth for the second quarter and full year than what was being projected by the street. Wachovia specifically cited the impact of rising interest rates on many aspects of its business, including capital markets, mortgage and investment businesses and, to a lesser extent, lending. Beyond the general theme of a slower business environment, Wachovia also indicated that it plans to take a special provision to build its credit loss reserves of $200 million in 2Q2000. Wachovia’s asset quality has been very good to date (NPAs were $246 million or 0.48% of loans and related assets at March 31, 2000). Management has indicated that non-performing loans are expected to rise $70 million in 2Q00. Donna Thiemer, Senior Vice President with Thomson Financial BankWatch, says, ‘While Thomson Financial BankWatch believes that Wachovia remains a very strong credit, the downgrades reflect the higher risk profile of the company given a higher interest rate environment and its impact on Wachovia Corporation’s earnings.’


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