S&P may still cut WaMu

Standard & Poor's said the BBB/A-2 counterparty credit rating on Washington Mutual Inc. (WaMu) remains on CreditWatch negative, where it was placed March 6 following its bid to raise a record $7 billion of common stock by early May.

The company said it entered into a definitive agreement for the direct sale of securities to an investment vehicle managed by Texas Pacific Group and to other institutional investors, including many top shareholders.

Proceeds will provide the capital the company projects it will need to exceed expected peak loan-loss provisioning in 2008, while continuing to grow its leading national retail banking franchise, the agency said.

WaMu's residential mortgage portfolio with a 50% concentration in California, combined with continued recessionary pressures in the broader economy, will keep credit-related expenses at record highs, the agency said.

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