Moody's cuts ResCap debt to Ba1, Ba2

Moody's Investors Service said it downgraded Residential Capital, LLC's senior debt to Ba1 from Baa3, its subordinated debt to Ba2 and short-term debt to Not Prime from Prime-3. The ratings remain under review for downgrade.

"These rating actions reflect the continued significant funding and valuation volatility in the single-family mortgage market, coupled with ResCap's challenges in restructuring its residential financial group, as well as an adverse business environment that could create further profit pressure at the firm," Philip Kibel, Moody's analyst, said in a written statement.

Moody's said its review of ResCap's ratings for possible further downgrade reflects the uncertainty regarding ResCap's net operating performance and funding of and origination flows in its business due to continued volatility in the mortgage market and a potentially more adverse mortgage credit quality environment.

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