Moody's may upgrade Saxon Capital

Moody's Investors Service said it placed Saxon Capital Inc.'s B1 corporate family rating and B2 senior unsecured rating on review for upgrade following the mortgage REIT's announcement of its proposed acquisition by Morgan Stanley (rated Aa3 with a stable outlook).

The agency said that the proposed merger into a large, diversified, highly rated financial services firm would boost Saxon's access to financial and operational resources, as well as new customers, in the increasingly competitive subprime mortgage market.

Despite uncertainty with regard to organizational structure and any explicit support for the senior unsecured notes of Saxon, Moody's said that, given Morgan Stanley's strategic approach to this transaction, the acquisition is a likely material credit plus for Saxon's debtholders.

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