S&P lowers Clayton Holdings

Standard & Poor's said it lowered the corporate credit rating on Clayton Holdings Inc. to B from B+ and the senior secured debt rating to B from B+ and the recovery rating was revised to 3, reflecting 50% to 70% recovery.

The outlook was revised to stable from negative.

The downgrades reflect the continued turmoil in the subprime mortgage loan and securitization markets, the uncertainty of the rebound and significantly reduced near-term profitability, the agency said.

Clayton's operating lease-adjusted debt-to-EBITDA ratio was 1.7 times as of Dec. 31.

According to S&P, the corporate credit rating reflects the company's narrow business profile, significant exposure to macroeconomic factors that affect mortgage origination and securitization, and non-contractual revenue streams.

These factors are offset partially by leverage levels that are moderate for the rating, the agency said.

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