Bank of America, the second- biggest bank in the U.S., said it may not guarantee $38.1 billion of Countrywide Financial Corp.'s debt after taking over the mortgage lender, fueling speculation that Countrywide's bondholders face renewed risk of default. More on the score.

``There is no assurance that any such debt would be redeemed, assumed or guaranteed,'' the Charlotte, North Carolina-based bank said in an April 30 regulatory filing, adding that no decision has been reached. Investors have grown more optimistic the bank would back Countrywide debt, and Standard & Poor's said this week it may raise Countrywide's rating to match Bank of America's.

Bank of America agreed to buy Countrywide, the largest U.S. mortgage lender, for about $4 billion amid speculation that the worst housing market since the Great Depression would bankrupt Countrywide. Bondholders have been counting on the merger to put Bank of America's AA credit rating behind Calabasas, California- based Countrywide's $97.2 billion of debt.

Countrywide's $1 billion of 6.25 percent notes maturing in 2016 traded at 90.25 cents on the dollar yesterday with a yield of about 7.9 percent, according to data compiled by Bloomberg. The debt traded as low as 46 cents in January, with a yield of 20 percent, just before Bank of America announced the purchase.

``I'd be quite concerned if I was a bondholder if the intent of Bank of America is as it reads in the filing,'' said Gary Austin, founder of PDR Advisors LLC in Charlotte. PDR manages about $600 million, doesn't hold Countrywide debt.

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