Fitch Upgrades Bear Stearns; Now Aligned with JPMorgan Chase Post-Merger

Business Wire, June 2, 2008

NEW YORK -- JPMorgan Chase & Co. (JPM) completed it acquisition of The Bear Stearns Companies, Inc. (BSC) on May 30, 2008. As a result, Fitch Ratings has upgraded the ratings of BSC and removed them from Rating Watch Positive, where they were originally placed on March 17. As the direct and sole owner of BSC, JPM has assumed the capital structure of BSC. It is the opinion of Fitch that JPM will accord BSC the same managerial and financial resources that are available to its other wholly-owned subsidiaries. As such, the ratings of BSC have been aligned with those of JPM and its subsidiaries.

Following the announcement of the proposed merger, Fitch upgraded the Issuer Default Ratings (IDRs) for BSC and its subsidiaries, and placed BSC's IDRs and debt ratings on Rating Watch Positive. These upgrades acknowledged JPMC's guarantee of all trading obligations and counterparty transactions of BSC and its subsidiaries, and JPM's assumption of operational oversight, both effective immediately.

Under the Guaranty Agreement, the Guaranty Period ends 120 days after the merger has been consummated. Upon termination, the Guaranty ends for new liabilities, but remains in effect for obligations guaranteed during the Guaranty Period. The Guaranty did not cover BSC's bond debt and capital securities. However, these instruments are now components of JPM's capital structure. It has not been determined, which of these securities, if any, will be replaced with obligations under JPM's name.

Fitch has upgraded the following ratings and removed them from Rating Watch Positive:

The Bear Stearns Companies Inc:

--Long-term IDR to 'AA-' from 'A-';

--Short-term IDR to 'F1 ' from 'F2';

--Short-term debt to 'F1 ' from 'F3';

--Senior debt to 'AA-' from 'BBB';

--Subordinated debt to 'A ' from 'BBB-' ;

--Preferred stock to 'A ' from 'BB ';

--Individual to 'B' from 'F'.

Bear Stearns Securities Corp.:

--Long-term IDR to 'AA-' from 'A-';

--Short-term IDR to 'F1 ' from 'F2'.

Custodial Trust Company:

--Long-term IDR to 'AA-' from 'A';

--Long-term deposits to 'AA' from 'BBB ';

--Short-term IDR to 'F1 ' from 'F2';

--Short-term deposits to 'F1 ' from 'F2';

--Senior debt to 'AA-' from 'BBB';

--Individual to 'B' from 'C';

--Support to '1' from '2'.

Bear Stearns Capital Trust III:

--Trust preferred stock to 'A ' from 'BB '.

Fitch has also withdrawn the following rating:

The Bear Stearns Companies Inc:

--Support '1'.

The Rating Outlook is Stable for all ratings.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.