Earlier I’d noted that Countrywide saw it’s long-term issuer default rating downgraded by Fitch, but the rating agency was by no means done: it also slashed Cerberus mortgage unit ResCap to junk status and warned that it may do the same with IndyMac Bank. It’s been a pretty busy day for the analysts over at Fitch, including the market bombshell earlier today that all classes of every second-lien RMBS deal since 2005 were being placed on negative watch. For Cerberus, it looks like the celebration over its recent Chrysler deal will be short-lived — the company also saw another of its mortgage holdings, Aegis, file for bankruptcy earlier in the week. In terms of its credit rating moves on ResCap, Countrywide and IndyMac, Fitch had this to say in its press statement:
[the downgrades reflect] the unprecedented disruption in the capital markets, which has severely reduced liquidity for mortgage-centric entities. Fitch’s actions reflect the impact on primary liquidity sources and the degree to which the duration of the current market dislocation affects financial flexibility. Sources of financing that Fitch believed would be more resilient have proven less accessible in the current stressed environment. While these actions are primarily prompted by reduced liquidity, other factors such as weakening operating performance and deteriorating asset quality beyond Fitch’s expectations are also considerations in today’s action.
