Standard & Poor's on Monday cut its ratings on Washington Mutual Inc (WM: Quote) into junk territory, citing exposures the bank has to bad mortgage debt and volatile markets.
"The company's weak equity pricing in the markets is also a concern, and it increasingly appears that market conditions could overtake credit fundamentals and leave the company with greatly diminished financial flexibility," S&P said in a statement.
The bank's liquidity, however, is adequate to meet its fixed obligations through until the end of 2010, S&P said. "During the past year, WaMu has conservatively and prudently managed its holding company liquidity position," the rating agency added....MORE
From the San Francisco Business Times:
J.P. Morgan Chase & Co. is seen as a likely suitor for Washington Mutual, which is staggering under huge mortgage losses.
Earlier this year, Chase made overtures to WaMu that were rebuffed. The New York bank reportedly offered a stock-swap buyout valued at $8 per share, although other reports put the buyout price at slightly more than $4 per share based on conditions such as contingent payments made based on the performance of WaMu loan portfolio performance. Instead, WaMu went with a $7 billion financing led by TPG Capital, formerly Texas Pacific Group, that valued WaMu at $8.75 per share. TPG structured the deal for its 13 percent stake in WaMu so that it’s made whole if the bank sells for less than it paid within 18 months of the April investment....MORE