Moody's cuts Refco, still on review

Moody's Investors Service downgraded all ratings of Refco Group Ltd., LLC, including the long-term corporate family rating to B2 from B1, senior secured bank credit facilities to B2 from B1 and senior subordinated debt to Caa1 from B3. Refco Finance Inc., which is a wholly-owned special purpose finance subsidiary of Refco and co-issuer of the senior subordinated debt, also was downgraded to Caa1 from B3.

All ratings remain on review for downgrade.

The action reflects Refco's decision to ask its CEO to take a leave of absence after failing to disclose a related party receivable of $430 million, Moody's said.

The company also disclosed that its previously filed financial statements cannot be relied upon. These developments raise serious concerns about the effectiveness of internal controls within Refco's operationally intensive businesses, Moody's said.

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