S&P: ResCap still on watch

Standard & Poor's said it maintained the CreditWatch with negative implications on the CC ratings on Residential Capital LLC (ResCap), where they were placed in November.

The continued CreditWatch now also considers a proposal to restructure two debt issues of a Mexican subsidiary that ResCap currently guarantees, the agency said.

If bondholders accept the proposal, S&P said it likely will lower the long-term issuer credit rating on ResCap to SD (selective default) and the ratings on the two debt issues to D.

Depending on the outcome of this process, the agency said it may conclude that a distressed-debt exchange offer has occurred.

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