S&P cuts Downey Financial

Standard & Poor's said it lowered the counterparty credit rating on Downey Financial Corp. to B+/C from BB+/B. The rating will remain on CreditWatch negative, where it was placed on June 3.

The agency said the action reflects concerns that Downey's weakened financial profile has left it exposed to potential funding and liquidity problems.

California's deteriorating housing market has had a substantial negative effect on Downey's credit performance, financial profile and capitalization, the agency added.

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