S&P puts Saxon Capital on positive watch

Standard & Poor's said it placed its B+/B counterparty credit rating on Saxon Capital Inc. on CreditWatch positive.

The agency said that the CreditWatch placement follows the announcement that Morgan Stanley (A+/stable/A-1) plans to acquire Saxon for $706 million, pending regulatory and shareholder approvals. We expect the transaction to be completed by the end of 2006.

S&P noted that this acquisition would greatly improve Saxon's business prospects given that it is highly dependent on third-party sources for mortgage loan production.

Having access to the U.S. mortgage franchise of Morgan Stanley should alleviate this concern, according to the agency.

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