Fitch keeps H&R Block on watch

Fitch Ratings said the ratings of H&R Block Inc. and Block Financial Corp. remain on Rating Watch negative following the announcement that the company is in discussions with Cerberus Capital Management to modify the Option One Mortgage Corp. sales agreement.

Ratings on watch are H&R Block's A- long-term issuer default rating and Block Financial's A- long-term issuer default rating, F2 short-term issuer default rating, BBB+ senior unsecured debt and F2 commercial paper.

Given the continued deterioration in the subprime mortgage business, Option One is expected to reduce origination volume to $200 million a month, which is significantly less than the amount needed to meet one of the closing conditions to the deal.

The agency said that any scenario that results in a material decline in H&R Block equity, impairs the company's current liquidity position or delays the disposition of Option One into calendar year 2008 could result in negative rating action.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.