Moody's downgrades Realogy

Moody's Investors Service said it downgraded the corporate family and probability-of-default ratings of Realogy to Caa1 from B3.

The agency lowered the $750 million senior secured revolving credit facility due 2013 and $3.17 billion senior secured term loan due 2013 to B1 (LGD 2, 23%) from Ba3 (LGD2, 23%), $550 million senior unsecured toggle notes due 2014 and $1.7 billion senior unsecured cash pay notes due 2014 to Caa2 (LGD5, 74%) from Caa1 (LGD5, 73%), and $875 million senior subordinated notes due 2015 to Caa3 (LGD6, 93%) from Caa2 (LGD6, 93%).

The SGL-3 speculative grade liquidity rating was affirmed.

The outlook is stable.

According to Moody's, the downgrade reflects the severe nature of the current residential real estate downturn, a highly leveraged capital structure and modest covenant cushions.

Ratings anticipate further revenue declines over the next few quarters as the real estate downturn continues into 2009, the agency said.

The Caa1 rating also considers the company's track record of implementing significant cost saving initiatives, Realogy's leading market positions, strong brands and solid long term growth fundamentals for the real estate industry, the agency noted.

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