Key News Item That Is Likely To Be Very Supportive For The Markets
This news was released after the NY session and helped support Asia. It will very likely support the Euro and NY sessions also.
By Jonathan Stempel
NEW YORK (Reuters) - Countrywide Financial Corp on Wednesday received a $2 billion injection from Bank of America Corp, helping the largest U.S. mortgage lender shore up its finances as it struggles with a liquidity crunch.
Bank of America, the second-largest U.S. bank, said it bought non-voting preferred stock that yields 7.25 percent and can be converted into Countrywide common stock at $18 per share, 17.5 percent below the shares' Wednesday closing price. Countrywide shares soared 20 percent in after-hours trading.
"It's a $2 billion vote of confidence from a major financial institution," said Steve Persky, a portfolio manager at Dalton Investments in Los Angeles. "Are we out of the woods yet in the mortgage market? No."
Sean Egan, managing director of independent credit rating firm Egan-Jones Ratings Co, said the investment "is a large positive in the sense that it bolsters confidence and enhances liquidity."
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