Shares of Wachovia (WB: sentiment, chart, options) have rallied more than 38% and Wells Fargo (WFC: sentiment, chart, options) is up nearly 4% after Standard & Poor's Ratings Services upgraded WB's counterparty credit rating to "A+/A-1" from "BBB-/A-3." The move follows on the heels of WFC's announcement that it is proceeding with its plan to buy Wachovia. S&P also lifted its CreditWatch status on WB to "positive" from "developing." "The revision of Wachovia Corp.'s CreditWatch status reflects our expectation that the definitive agreement it has with Wells Fargo will close and that Citigroup Inc. and Wells Fargo's discussions concerning a possible sale of certain of Wachovia's banking assets have terminated," said Victoria Wagner, an S&P credit analyst.

Today's news was the latest in an ongoing story that saw Citigroup (C: sentiment, chart, options) officially end talks with Wachovia. While Citi has agreed not to block the WFC/WB tie-up, the company is proceeding with a lawsuit seeking damages. "The dramatic differences in the parties' transaction structures and their views of the risks involved made it impossible to reach a mutually acceptable agreement," Citigroup said in a statement. C shares are also trading higher this afternoon, rising nearly 10% at last check.