Fitch Ratings has placed the debt of PHH Corporation
(PHH) on Rating Watch Negative. The credit ratings remain as follows:
-- Issuer Default Rating (IDR) 'A-';
-- Senior unsecured debt 'A-';
-- Commercial Paper 'F2'.
The Rating Watch Negative results from Fitch's concerns related to PHH's announced delay in filing audited year-end financial statements. Specifically, Fitch is concerned with the unknown duration of the delay, the eventual outcome of the audit, and PHH's depth of accounting expertise. The Rating Watch Negative would be removed and ratings affirmed following the satisfactory review of audited financial statements. Given the scope of the accounting issues, and that Fitch does not see any direct influence on PHH's business model or day-to-day operations, the magnitude of rating changes is expected to be limited.
PHH announced that it will delay filing its year-end financial statements with the Securities and Exchange Commission (SEC) because the company is still in discussions with its auditors about open items. Fitch believes the accounting issues are limited to some technical items related to the spin-off from Cendant. Although, the accounting issues have been identified and management believes these issues will be rectified in a timely matter, Fitch remains cautious on the timeline for release of audited financial statements.
PHH's near-tem liquidity is adequate but a prolonged delay in filing could pressure funding access. PHH has filing covenants in their bank agreement and public indenture that they will be in violation with an extended delay. Fitch believes PHH has until April 10 to deliver financial statements to the bank group, and mid-July in regards to the public indenture. Fitch will evaluate PHH's progress relative to these timelines and also evaluate the potential of PHH obtaining waivers, if such becomes necessary.
The accounting issues PHH's auditors raised, question PHH's depth of accounting expertise. The hiring of Claire Raubenstine as new CFO with an extensive accounting background adds needed depth of accounting expertise to PHH.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
-- Issuer Default Rating (IDR) 'A-';
-- Senior unsecured debt 'A-';
-- Commercial Paper 'F2'.
The Rating Watch Negative results from Fitch's concerns related to PHH's announced delay in filing audited year-end financial statements. Specifically, Fitch is concerned with the unknown duration of the delay, the eventual outcome of the audit, and PHH's depth of accounting expertise. The Rating Watch Negative would be removed and ratings affirmed following the satisfactory review of audited financial statements. Given the scope of the accounting issues, and that Fitch does not see any direct influence on PHH's business model or day-to-day operations, the magnitude of rating changes is expected to be limited.
PHH announced that it will delay filing its year-end financial statements with the Securities and Exchange Commission (SEC) because the company is still in discussions with its auditors about open items. Fitch believes the accounting issues are limited to some technical items related to the spin-off from Cendant. Although, the accounting issues have been identified and management believes these issues will be rectified in a timely matter, Fitch remains cautious on the timeline for release of audited financial statements.
PHH's near-tem liquidity is adequate but a prolonged delay in filing could pressure funding access. PHH has filing covenants in their bank agreement and public indenture that they will be in violation with an extended delay. Fitch believes PHH has until April 10 to deliver financial statements to the bank group, and mid-July in regards to the public indenture. Fitch will evaluate PHH's progress relative to these timelines and also evaluate the potential of PHH obtaining waivers, if such becomes necessary.
The accounting issues PHH's auditors raised, question PHH's depth of accounting expertise. The hiring of Claire Raubenstine as new CFO with an extensive accounting background adds needed depth of accounting expertise to PHH.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.