UPDATE 1-S&P, Moody's raise Countrywide after BofA takover

(Recasts, adds Moody's action)

NEW YORK, July 1 (Reuters) - Two rating agencies on Tuesday raised their debt ratings on Countrywide Financial Corp. after the largest U.S. mortgage lender was acquired by Bank of America (BAC.N).

S&P raised Countrywide's counterparty rating to "AA," the third-highest investment-grade level, from the highest junk level of "BB-plus" to align it with ratings of Bank of America. The upgrade reflects expectations that Bank of America will honor Countrywide's debt, S&P said in a statement.

And Moody's Investors Service upgraded Countrywide's senior debt rating to "Aa2," in line with Bank of America's ratings. The ratings of Charlotte, North Carolina-based Bank of America were affirmed.

Moody's said Bank of America will repay certain Countrywide debts after the close of the transaction, but a substantial amount of Countrywide debt that is not guaranteed by the bank will remain outstanding.

Countrywide had $97.23 billion of outstanding debt as of Dec. 31, including Federal Home Loan Bank advances to Countrywide Bank of about $47.68 billion.

Moody's said Countrywide's creditors will benefit from Bank of America's banking franchise, better risk management and implicit support from the bank.

The rating agency cautioned, however, that if a future organizational structure results in uncertainty about support for Countrywide's non-bank credits, a negative rating action could follow.

The third rating firm, Fitch Ratings, kept its "BBB-minus" Countrywide rating on review until details of the new corporate structure are announced.