Moody's rates New Century senior debt B1

Moody's Investors Service said it has assigned a B1 rating to New Century Financial Corp.'s $210 million convertible senior notes due 2008.

The outlook is stable.

Moody's said the B1 rating reflects the firm's market leadership in the sub-prime origination segment of the mortgage industry. New Century's operating platform has a growing national presence, with good underwriting evidenced by consistent loan performance.

According to Moody's, the credit positives are attenuated by a highly leveraged capital structure, a record of past liquidity difficulties, and substantial buyer concentration in the whole loan arena. Other credit challenges include the fact that sub-prime mortgages are less liquid, particularly in time of secondary market stress, and that bondholders have structural subordination to secured obligations of the operating subsidiary.

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