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S&P lowers Refco to B-
Standard & Poor's said it lowered its long-term counterparty credit rating on Refco Group Ltd. LLC to B- from B+.
S&P also said the subordinated debt rating on Refco was lowered to CCC from B-.
The ratings remain on CreditWatch Negative.
The actions are in response to the company's announcement that it has placed a moratorium on withdrawals of customer funds from its nonregulated subsidiary, Refco Capital Markets Ltd.
The company announced Monday that a previously undisclosed receivable of $430 million was owed by entities controlled by the company's former Chief executive officer Phillip Bennett. Bennett has been arrested and charged with securities fraud, S&P said.
Although Bennett repaid the $430 million receivable in cash, the funds may not be available to Refco, which is a holding company that relied on its operating subsidiaries to upstream dividends to meet debt service requirements, S&P said.
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