SCVC1999, you write: "I believe if you check the prospectus, you will find that it states that anyone who acquires Countrywide, must guarantee the debt. Since B of A acquired Countrywide, I think they must guarantee it."
BofA did not acquire Countrywide, a 'merger subsidiary' acquired CFC. That merger sub had no assets other than the 106+ million shares of BofA stock needed to pay CFC shareholders for their CFC stock. That is how it works. If BofA elected to guarantee the debt of CFC (now the merger sub), then they probably would tank their own credit ratings. Why would they choose to do it? There is no guarantee on this one. That is reality -- these trust preferred have no recoure to BofA the parent. Implicit guarantee perhaps -- but we know what that is worth in court, right?
This security is guaranteed by the parent CFC company.
The only way this goes into default is if BofA's CFC subsidiary goes bankrupt.
BofA could allow CFC to go bankrupt, but they've swapped out the mortgage product line of CFC and replaced it by BofA's product line, and seem to be treating CFC as if it's part of BofA.
They got a bargain price for CFC, and the market has rewarded them for it. They have had a strategy of acquisition of bargain assets and they knew what they were buying and how they could increase it's value.