Moody's drops PHH senior unsecured

Moody's Investors Service said it downgraded PHH Corp.'s senior unsecured rating to Ba1 from Baa3 and its short-term rating to Not-Prime from Prime-3.

All long-term ratings are under review for further downgrade, the agency said, noting that this rating action follows a decline in the profitability of PHH's fleet management segment due to higher fleet leasing funding costs and uncertainty regarding the availability of funding for these leasing activities.

If PHH is unable to obtain cost effective, stable sources of fleet lease funding that ensure its ability to originate new car leases it could face franchise impairment, the agency said, adding that the review will focus on the company's ability to stabilize the profitability of its fleet management activities and obtain cost effective, stable funding for its fleet leasing activities.

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