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S&P drops ResCap to SD
Standard & Poor's said it lowered Residential Capital LLC's long-term counterparty credit rating to SD (selective default) from CC. Ratings were removed from CreditWatch negative, where they were placed April 24.
The action follows the company's completion of an exchange offer for unsecured bonds that the agency said it interprets as a distressed debt exchange. There are no ratings or outlook changes on GMAC LLC, Residential Capital LLC's parent.
S&P said the downgrade reflects the fact that the exchange offer paid less than face value to certain Residential Capital LLC bondholders and left untendered bonds in a subordinated position to the new notes. The exchange does not constitute a legal default, according to the agency.
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