Fitch lowers Bank of America to C/D

Fitch Ratings said it downgraded Bank of America Corp.'s individual rating to C/D from C and its preferred stock to BB from BBB following a significant loss to common shareholders in the fourth quarter of 2008 and Merrill Lynch & Co., Inc.'s massive $15 billion loss.

Both ratings remain on Rating Watch negative.

At the same time, Fitch affirmed the bank's A+ long-term and F1+ short-term issuer default ratings, reflecting Bank of America's systemic importance and the magnitude of support provided by the U.S. government. The outlook for these ratings remains stable.

The agency said the decision to increase the notching of the preferreds reflects a high percentage of preferreds in total capital, the costs of servicing these deeply subordinated issues and potential omission or deferral of dividends to preserve capital. Following the U.S. government capital injections, preferreds and trust preferreds now total over $100 billion and represent more than 50% of the bank's total tangible equity, and Fitch expects annual debt service related to these instruments to exceed $5 billion annually.

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