DBRS Confirms Bear Stearns Ratings and Positive Trend Following Power Portfolio Acquisition

DBRS has today confirmed all ratings for The Bear Stearns Companies Inc. (Bear Stearns or the Company), including the Company’s A (high) Issuer & Senior Debt rating, following its announced acquisition of a portfolio of power and natural gas assets. The trend for all long-term ratings remains Positive.

Bear Stearns announced today that it has agreed to acquire a portfolio of power and gas contracts, as well as other assets, from The Williams Companies, Inc. The portfolio includes approximately 7,700 megawatts of gas-fired tolling capacity, various full requirements power supply contracts and an associated trade book.

DBRS views the transaction favorably because it gives Bear Stearns a geographically diverse generation portfolio that complements the Company’s growing energy trading activities. The physical power plant tolling agreements and power contracts, as well as information systems, are adding substantially to the Company’s existing equity ownership in various power-related assets. The acquired assets also enhance the growing capabilities of Bear Energy LP, the Company’s energy marketing and trading subsidiary.

Given the Company’s conservative risk management and culture, DBRS considers the additional risk posed by the increased exposure to energy and power markets to be commensurate with the opportunities the transaction offers. Although the transaction is not without risk because it involves longer-term contracts in volatile markets, Bear Stearns is well prepared to manage its exposure to longer-tailed risks consistent with the Company’s conservative risk profile. In addition, the generally low or negative correlation of energy and commodities businesses with the Company’s other businesses provides benefits for managing risk across Bear Stearns.