S&P downgrades Ditech

S&P said it lowered its long-term issuer credit rating on Ditech Holding Corp. to CCC from CCC+. The outlook is negative.

At the same time, the agency lowered the issue rating on the company's senior secured term loan due 2022 to CCC from CCC+ and the rating on the second-lien notes due 2024 to CC from CCC-.

The recovery rating on the senior secured term loan is 3, and the recovery rating on the second-lien notes is 6, indicating an expectation for meaningful recovery (50%) and negligible recovery (0%), respectively, in the event of a payment default.

“The downgrade follows Ditech's disclosure in its third-quarter 10-Q that it entered into nondisclosure agreements and began discussions with certain of its corporate debt holders regarding potential strategic transactions, including potential recapitalization transactions, that may involve implementation through a Chapter 11 bankruptcy, and that this possibility raises substantial doubt about Ditech's ability to continue as a going concern,” the agency said in a news release.

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