Fitch affirms Sovereign

Fitch Ratings said it affirmed the long-term issuer default ratings of Sovereign Bancorp, Inc. at BBB-, senior debt at BBB- and short-term issuer default rating at F3, along with Sovereign Bank's long-term issuer default rating at BBB, long-term deposits at BBB+, subordinated debt at BBB-, short-term issuer default rating at F2 and short-term deposits at F2.

The outlook is stable.

These affirmations follow news of the bank's sizable capital raising plan. This plan consists of $1 billion in new common equity and $500 million in subordinated debt and is expected to be completed in the next few days.

The outlook reflects expectations that asset quality problems will remain at manageable levels and capital ratios will be maintained at least at pro-forma levels, Fitch said.

Maintenance over time of strong liquidity at the holding company combined with reduced holding company obligations could result in an alignment of holding company and bank level ratings, the agency said.

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