Fitch affirms Bear Stearns

Fitch Ratings said it affirmed The Bear Stearns Cos. Inc.'s A+ long-term issuer default and senior unsecured debt ratings, F1+ short-term issuer and commercial paper ratings, A preferred debt rating, B individual rating and 5 support rating. As of May 31, total long-term debt was $46.6 billion and short-term debt was $32.9 billion.

The outlook is stable.

The agency said the ratings reflect Bear Stearns' strong franchises in global clearing and prime brokerage. In addition, the increased diversity within its fixed-income franchise beyond mortgages has made the firm less vulnerable to changes in the interest rate environment.

Despite a lower level of market risk, the agency believes Bear Stearns will be challenged to broaden its franchise further. Competition throughout the financial services industry is intensifying, with universal banks gaining market share in a number of businesses. Many of these global firms have larger capital bases than Bear Stearns, which means good staying power and a greater capacity to absorb losses, Fitch's opinion.

The stable outlook reflects Fitch's expectation that the company's revenue and earnings growth is sustainable without assuming a higher risk threshold or incurring disproportionately greater leverage.

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