S&P keeps PHH on watch developing

Standard & Poor's said the BBB-/A-3 counterparty credit rating on PHH Corp. will remain on CreditWatch with developing implications, where it was placed on Oct. 18.

S&P said the watch reflects PHH's statements that its board will determine whether to continue to explore strategic alternatives regarding its mortgage and fleet leasing businesses.

According to the agency, PHH said it ended a $1.8 billion agreement to be bought by General Electric Capital Corp. (AAA/stable/A-1+). In conjunction with the deal, GECC entered into an agreement to sell PHH's mortgage operations to an affiliate of the Blackstone Group, a private equity company. Blackstone's inability to secure the required financing to close the deal, however, as well its unwillingness to increase its equity contribution, resulted in PHH calling off the sale because it had not been completed by year-end as stipulated in the merger agreement.

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