Thursday, December 22nd, 2011, 4:57 pm
PHH Corp. (PHH: 11.11 0.00%) saw its stock plummet almost 15% Thursday after Standard & Poor's Ratings Services raised concern that the mortgage company will not be able to pay unsecured corporate debt.
PHH's stock fell $1.91, or 14.67%, to close at $11.11. The stock is down 52% so far this year.
S&P downgraded PHH's credit and unsecured debt from "BB+" to "BB-" late Wednesday, and said it could downgrade the company another notch if "management is unable to execute a clear strategy" to repay the debt due in March 2013.
The ratings service, however, said it does think PHH will be able to repay the $423 million in debt "exclusively from free corporate cash flows."
The outlook, S&P said, is a reflection of PHH's "reduced financial flexibility" as well as uncertainty in the U.S. mortgage market. PHH was the seventh-highest originator of mortgages in 2010 at $49 billion, making up 3.1% of the market.
PHH reported a loss of $148 million in the third quarter, a significant widening form $8 million for the third quarter 2010.
Stock moved higher for other mortgage originators and banks Thursday, including Wells Fargo (WFC: 27.25 0.00%), U.S. Bancorp (USB: 27.34 0.00%), Bank of America (BAC: 5.47 0.00%), Citigroup (C: 27.65 0.00%) and JPMorgan Chase (JPM: 33.45 0.00%).
Write to Andrew Scoggin.
Follow him on Twitter @ascoggin.
Source: http://feedproxy.google.com/~r/HWTop/~3/4AvYFa7RwRs/
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