S&P keeps Doral on positive watch

Standard & Poor's said its B long-term counterparty credit rating on Doral Financial Corp. remains on CreditWatch positive, where it was placed July 20.

The initial placement followed Doral's announcement that it had completed the sale of its common stock to Doral Holdings Delaware LLC, a newly formed entity, and repaid in full $625 million in senior notes.

"We think the completed recapitalization has resolved the company's near-term liquidity issues and substantially improved its capital position," S&P credit analyst Robert Hansen said in an agency rating.

Furthermore, the agency expects the recapitalization to have a positive impact on the company's reputation among depositors and borrowers, which S&P believes had been tarnished by previous accounting and liquidity issues.

However, S&P said that although it views the recapitalization positively, the agency remains concerned by the company's significant deterioration in credit quality amid a challenging economic environment in Puerto Rico.

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