S&P Affirms Rtgs on Countrywide Credit Industries

Business Wire, June 14, 1999

NEW YORK--(BUSINESS WIRE)--Standard & Poor's--

June 14, 1999-- Standard & Poor's today affirmed its ratings on Countrywide Credit Industries Inc. and Countrywide Home Loans Inc. in light of the company's announced agreement to acquire Balboa Insurance Co. The affirmation is based on the financing of the acquisition, as Countrywide Credit Industries Inc. (CCII) is expected to issue $200 million of new common stock toward the $425 million purchase price of Balboa Insurance Co. (Balboa). Balboa is licensed in 50 states and specializes in creditor-placed auto and homeowners insurance. Voluntary homeowners and life and disability products are also offered and are expected to become an area of emphasis. Operating synergies are expected to be realized once Balboa's products are offered throughout CCII's varied retail platform and to its broad customer base. CCII will be able to leverage its experience in selling and underwriting insurance through its full-service insurance agency, Countrywide Insurance Services Inc.

The incremental financial leverage created with this acquisition should be manageable and the expected level of internal capital generation sufficient to build equity to support this new operating subsidiary. In addition, the level of goodwill to be generated from this acquisition is expected to be manageable. While acquisitions have never been a part of CCII's business strategy, the size of the Balboa acquisition, CCII's history in the insurance business, and its retail platform mitigate this concern. Nevertheless, Balboa does create new operating and financial challenges for CCII with its inherent insurance sector risks and the regulatory oversight of its business. Standard & Poor's will monitor this new operating subsidiary's impact on CCII's financial profile.

OUTLOOK: STABLE

CCII's loan production continues to be strong, despite recent upward movements in long-term interest rates. Countrywide has successfully minimized the impact of interest rate changes on its core business and profitability, which supports the company's stable outlook. This has been achieved not only by an effective hedging strategy, but also through further development of loan origination channels and new loan products and services, Standard & Poor's said.--CreditWire -0-

RATINGS AFFIRMED:
Countrywide Credit Industries Inc.
Counterparty credit ratings         A/Stable/--
Contrywide Home Loan Inc.
Counterparty credit ratings         A/Stable/A-1
Senior unsecured                    A/A-1
(1)Subordinated debt                A-
(1)Commercial paper                 A-1
Countrywide Capital III
Preferred stock                     BBB+
Countrywide Capital I
(1)Preferred stock                  BBB+

(1)Guaranteed by Countrywide Credit Industries Inc.