S&P: Thornburg faces challenges

Standard & Poor's said that Thornburg Mortgage Inc.'s (SD) announcement that it has modified the terms of its outstanding senior subordinated secured notes to allow for payment in kind payments further underscores the difficulties the company is facing due to the state of the housing and funding environment.

This modification of debt supports the current rating, which will remain effective until the company has resolved the tender offer of its preferred shares, the agency said, adding that the deadline for the tender offer has now been extended to Dec. 31.

The agency added that the PIK agreement allows the company to substitute stock or additional debt for its semiannual interest payments.

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